Why Banks (And Other Businesses) Can No Longer Afford Not To Innovate

This post was authored by Martin Yan and originally appeared here on Liferay.com

——————————

“Financial transactions are just numbers; it’s just information. You shouldn’t need 100,000 people and prime Manhattan real estate and giant data centers full of mainframe computers from the 1970s to give you the ability to do an online payment.” – Marc Andreessen

There’s good news and bad news for those involved in the financial sectors. The good news is that this isn’t 2008, and if your company hasn’t gone under and you still have a job—well, that’s good. The bad news is that it’s 2016, and simply staying afloat isn’t going to cut it anymore.

Many technological changes have happened over the past seven years. Your average consumer is now experiencing a lot of their lives on mobile. According to a survey by eMarketer, US adults spend an average of almost 3 hours per day on their devices. This means people are using their smartphones and tablets to perform tasks like shopping, reading, viewing, and working.

Banks, however, haven’t done a good job of adapting their customer experiences. Which means they are not only playing catch up, but also giving space for fintech startups to capitalize on the void being left behind.

These disruptors are identifying the gaps in between consumer expectations and their actual banking experiences. Instead of focusing on a specific product, they are asking questions from the user standpoint and putting the customer experience first. This has meant a market filled with new entrants offering personal wealth management, mobile payments, eCommerce, peer-to-peer lending and more.

What does this mean for banks? Quite frankly, the risk of becoming irrelevant. If financial institutions do not adopt the right technology and make it a priority to innovate, they will have a harder time driving revenue and retaining their customers.

Granted, the problem is not so simple. Any traditional monolith faces a harder and slower process of change. Historically speaking, financial IT has been resisting change to legacy systems and processes with which they are familiar. The technology is a central part of operations, albeit outdated and unstable, and shaking things up in one area could mean seeing more than a few straws falling out in other places.

But to not be innovating is to be preparing for your own coffin. Questions revolving around cyber threats and security breaches need to be addressed, but so do your customers’ demands for online and mobile banking. All banks are expected to be secure—not all of them offer a good omnichannel experience.

How will you provide for them? Because the future is quickly shifting towards those who are not only meeting the expectations of today’s customer, but predicting the needs of tomorrow’s.