As a whole, the retail banking sector has embarked on widespread modernization efforts in the last few years. Big players and small to mid-sized banks alike have taken on the challenge of transforming their systems in order to accommodate younger, more agile, and more demanding customers—most of whom are considered “digital natives.” Not all financial institutions evolve at the same speed, however, and it may seem like certain banks are rolling out innovations much faster than others.
If you represent a retail banking institution, the speed at which your industry is evolving may excite and alarm you at the same time. Moreover, you may fear that you aren’t spending as much money or revamping your banking system as frequently as your peers seem to do. But are your fears warranted, and should you take on the same philosophy of rapid development as other banks? Is that the only valid approach to attracting new customers and securing the loyalty of old ones?
In order for any new technologies to be worth the investment, you will first need a solid technological foundation for acquiring and integrating them. This article proffers an “architecture first” approach to ground your acquisitions and, ultimately, help your bank make timely and accurate decisions about the tech it will incorporate for its retail services.
What will an Architecture-First approach involve for Retail Bank?
To those who are not yet familiar with the term, the “architecture first” approach is a principle in modern software management in which the software product’s driving requirements, design decisions of architectural significance, and lifecycle plans should all gel together before any resources are committed to the product’s full-scale development.
In the context of your bank’s situation, adopting an architecture-first philosophy does not require you to do the expensive and tedious work of building a brand-new retail banking system from scratch. It can also apply to the acquisition of new core banking software from a solutions provider. The solution can be said to manifest the spirit of an architecture-first approach if the following criteria are present:
- A strong technological foundation possessing intelligent components, an extensive financial services portfolio, and full scalability, and;
- Architecture that fully aligns with your bank’s operating models and business strategies.
An architecture-first kind of solution will accomplish two very important things for your bank. First, it will prepare your bank for imminent technological disruption in the future and thus allow your organization to be more agile towards the continuous innovations being done in your sector. Second, the architecture-first approach will help your retail bank determine its own path to success and subscribe to a particular vision for acquiring any new innovations.
The banking industry’s landscape may be rife with technological innovations, but not all of them may be right for your institution. Given the limits to resources like your budget, you will need to be able to sort the necessary and beneficial upgrades from those that, upon closer examination, will not be viable to you in the long run. An architecture-first solution will provide you with a blueprint for modernization that won’t overwhelm your bank—putting the focus on your bank’s individual needs as opposed to innovation just for innovation’s sake.
Banks are now seeing a measure of success in their retail services after onboarding complete suites that are tailor-made to accommodate particular innovations. One pertinent example is that of cloud solutions that are specifically designed for fully digitalized and customized retail banking services, like personalized lending. The architecture is what governs these innovative functions and allows them to work seamlessly alongside each other, all toward a bank’s goal of expanding its custom retail banking options.
In summary, the architecture-first approach is a way to harness innovation with the institution’s mission vision as a guiding light. Given the meaning of the word “architecture” as a set of practices that involve design and construction, perhaps a good parallel can be drawn between using an architecture-first solution and homeownership. Homeowners don’t always want the biggest or flashiest houses. Rather, they aspire to live in the kind of house that snugly accommodates them and all of their changing needs. They look for an overarching foundation that will welcome continuous home improvements, like for plumbing, re-tiling, or re-roofing.
That same logic drives the architecture-first approach and customers’ willingness to immerse themselves in a complete and well-thought-out retail banking system. As a decision-maker for your own retail bank, you can advocate for a solution that enables not just rapid development, but the continuity of innovation. This is the best way to stay competitive and to truly resonate with your bank’s intended retail customers.
Avoid innovation just for the sake of, as well as any temptation to needlessly compare your bank to other banks or to fintech whose modernization efforts may be vastly different from yours. Envision the “house” before you envision any other separate functionalities, and with any decision you make with regard to your bank’s technological foundations, always stay true to its timeless and deep-rooted values.