Fintech has taken the banking industry by storm. The influx of innovative technologies, cloud banking, and sophisticated processes have led the traditional and incumbent banks to rethink and realign their way of operating. Fueled by the 2020 pandemic, there is a growing need for the modernization of core banking systems to support the ‘new normal’. The modern core banking systems require better agility, flexibility, and scalability to respond to evolving customer demands. Traditional banks have pushed themselves to meet the inherent capabilities of the new normal. To remain competitive, the future of successful enterprises relies on modernizing core banking systems.

Ensuring business continuity by embracing internet banking, in all its glory, is just a small and hurried step toward digitization. But to add value to the digital revolution, enterprises will require a long-term vision, strategy, and approach for the systemic migration and adoption of advanced technologies. The biggest challenge for banks is overcoming the limitations of legacy systems in a microservices-era.

Before we address the need for an expert service provider for a successful transformation to advanced digital systems, it is imperative to comprehend the key features of modern core banking along with its benefits.

Why Banks Need to Modernize Their Legacy Systems

Core transformation can no longer be ignored by financial institutions that are still reliant on legacy systems. While the high costs of transformation have held back most organizations, the benefits of legacy modernization far outweigh them. Common motivations for legacy modernization include:

• Marketplace relevance: To enable digital competitiveness, core systems should have the capabilities to support myriad digital endeavors. Today, these digital capabilities are bundled with new and emerging technologies of artificial intelligence (AI), machine learning (ML), blockchain, and others to stay ahead of the competition. For enterprises, market relevancy is just not about being digitally-abled, but to be able to capitalize on their digital capabilities.
• Better use of human resources: Legacy software and systems are known to be complex environments that are difficult to manage, navigate, and understand. The outdated UI does not support the user-friendly and intuitive interfaces that the new-age employee is used to. Getting used to this setup would require additional training – increasing costs and effort. Modernizing your legacy system will save time, reduce dependency on expensive talent for legacy technology skills, and optimize cost-per-hire.
• Improved services: Influenced by eCommerce and other retail sectors, the modern consumer has come to expect the same flexibility, ingenuity, and omnichannel experience from their financial providers. The slow, often crashing, and poorly performing legacy systems fail to deliver the agility and scale that modern processes demand. Modernizing the system allows for process simplification, personalized user experiences (e.g., AI/NLP-based chatbots), and allow for better cross-selling of products – leading to enhanced service levels, product innovation, and customer satisfaction.
• Enhanced security: Aging and outdated systems are vulnerable to cyberattacks and malicious activities. Most legacy systems no longer receive vendor support and miss out on critical security patches, upgrades, and new functionalities. For instance, BlueKeep is a notable vulnerability identified in NT-based Windows operating systems. Although most organizations have stopped Windows XP or 2000 usage, most still rely on Windows 7. Similarly, Windows systems are also vulnerable to SMBGhost or CoronaBlue; allowing malicious players to remotely take over systems. Such vulnerabilities leave your enterprise open to security breaches that can be very costly to banks.
• Highly cost-efficient: Legacy systems are notorious for rising hidden costs for an enterprise. For instance, in 2019, the US Federal government spent 80 percent of its IT budget on maintenance and operations or around $337 million of taxpayers’ money. Modernizing digital core banking systems can significantly reduce operational costs and service delivery costs.
• Enhanced optimization: Basing strategies on scaling economies and commercial platform vendors’ capabilities improve user productivity enabling better optimization. Modernizing legacy systems also enables the banks to adopt “configure model” instead of “customize model”, thus, eliminating technical redundancies.
• Becoming future-ready: The future of banking is defined by emerging technologies, dynamic business models, and rapidly changing customer expectations. To be future-ready, banks need to drive system transformation today. The push for open banking initiatives also highlights the need for a modern system that supports user-experience centric core banking system requires a microservices-based architecture and robust API framework for third party integration. Having up-to-date digital systems will further help in reasonable and easy-to-maintain upgrades in the

The Big Question: How to Modernize Core Banking?

Addressing the challenges of the near future and the next normal would require a thorough assessment of the current core banking platform and external environments. Modernizing requires a disciplined and well-thought approach. Banks will need to understand whether a full replacement or a systematic upgrade will offer a better value-to-risk ratio.

• Full replacement: Immediate replacement is not only too risky but can be quite expensive and time-consuming and should only be opted in those situations of sudden regulatory imperatives or obsolescence. The biggest catch in full replacement is that the benefits or any internal issues can only be realized or tracked when the migration is complete, and the legacy system software is de-commissioned.
• Progressive migration: The most popular strategy amongst banks, also known as phased migration, undertakes a systematic and steady migration approach. It allows the banks to keep working with legacy systems for a considerable amount of time while simultaneously building a modernized architecture to be smoothly introduced and transitioned into.
• A greenfield banking approach: Developing completely new technologies in new customer-centric environments without any constraints based on the legacy systems are a few of the many building blocks of the Greenfield approach to driving the digital transformation of the banks. It is becoming the most effective alternative for traditional banks to test the waters and then adopt the most suited technologies.

Core banking modernization best practices

• Assess the company’s technical debt: Banks should be able to closely identify and calculate their technical debt so that they can properly prioritize the debt and its impact on the legacy system processes.
• Identify the organization’s objectives and examine risk tolerance: The banks, when going for legacy system modernization, must assess various business variables like customer satisfaction levels, modernization objectives, cost savings, business continuity, and risk management. These thorough assessments help to provide context for the selection of the most efficient and effective modernization approach.
• Choose futuristic solutions: The technological advancements are taking place at an unprecedented scale, requiring organizations to be agile in the adoption of future technologies. For this, it is imperative to build solutions that support future adaptability.
• Extensively define the post-release strategy: One of the most crucial modernization practices is to create a follow-up plan that includes successful training of employees, ensuring systematic and streamlined process, timely update schedule, and undertaking other maintenance tasks.

Using Temenos for Legacy System Transformation and Modernization

The industry leader in banking software, Temenos, has rolled out multiple products to help banks overcome legacy issues and drive successful transformation to foster an improved and more efficient working environment for the banking institutions. However, the complex nature of the finance industry along with rapidly evolving technologies, finding a partner with deep expertise and vast experience in the deployment and configuration of Temenos is crucial to leverage its benefits.

Maveric, being a leading provider of end-to-end digital core banking solutions for more than two decades, is also a certified Temenos strategic partner helping banking organizations to modernize their legacy systems to obtain better business outcomes like increased revenue growth, cost savings, and enhanced customer satisfaction.

Conclusion

As the world adjusts to the new normal, the solution to legacy systems is the modernization of core banking systems. Banks looking to enhance their IT efficiency are turning to innovative technologies of AI/ML, cloud computing, and the internet of things (IoT). The integration of new technologies unlocks the growth and revenue potentials of banks while building a loyal and satisfied customer base. It also enables real-time systems that are agile, scalable, flexible, and cost-effective.

This article is originally published in Finextra

The global banking system had been witnessing a positive streak for the past few years with stable ratings across most countries. It was progressing towards and preparing itself for the next wave of disruption with blockchain and AI-backed technologies as its epicenter.

However, in January, the world was hit by COVID-19, a pandemic no one ever saw coming, let alone being equipped to mitigate it. The crisis resulting from a total lockdown scenario changed the face of businesses and everything else around the world, including the banking industry. It threw the banking sector into the spotlight, coaxing it to accelerate digitization overnight.

The pandemic, undoubtedly, has become the turning point for the banking sector as well as its workforce and its customers. The ones who have been resistant to going the digital way have been compelled to adopt and embrace digital banking at full throttle.

The shining moment of this transformation has been the observation that more people are realizing the convenience of digital banking and are now reconsidering their bank branch visits altogether. Some of the banks and financial organizations have come to daunting realization about their archaic processes and the urgency of developing meaningful digital banking experiences, while the others are contemplating to decrease their branch budgets and networks and reinvest in digital channels.

The digital transformation of banks

World Economic Forum in its recent report hinted on the dire state of the world economy; indicating that the containment measures are having an inversely proportional effect on the economies where the ‘economists cannot even begin to predict the end of the recession that is now underway.’

The banks have been playing and will continue to play the lead role in the recovery of the global economy. Some important points to keep in mind are:

• Worldwide, the banks have been operating with limited staff and have tirelessly worked towards making work-from-home possible to ensure the continuation of seamless financial transactions, showing that they too are the front-line heroes who are determined to fight against the virus with all their grit.
• The authoritative banking regulatory bodies in most countries streamlined the measures regarding easing-out debt obligations and extending leniencies, such as moratoriums on funded facility repayment.
• Globally, the banking sector proactively addressed the need for better and more secure digital banking solutions to help their customers to carry out essential financial transactions without risks.

In short, the focus of banks around the world during the pandemic-led lockdown has been to offer essential services and extend support solutions with optimum attention to quality, customer experience, security, and risk control, with the safety of their workforce and customers as their priority.

After withstanding these times of crisis, the banks have also realized that it cannot dwell more on the subject and will have to rapidly start creating a smarter digital banking framework if they want to sustain themselves in the immediate and long-term future.

Considerations for the digital journey ahead

As the digital transformation of the banks takes the center stage, they need to gain deep insights into its multiple variables. The aftermath of COVID-19 will present completely transformed customers and customer demands. Robust, secure, and fast digital banking solutions will be the key drivers of customer experiences.

To retain their existing customer base and stand their ground against the neo banks and the challenger banks, traditional banking institutions will need highly integrated and scalable digital solutions. While cutting costs may become more pressing than ever, the banks will have to reprioritize their spending and dedicate adequate resources for digital transformations, cyber security, and data protection.

Another important pre-requisite while mapping the digital journey is to develop better operational capabilities. A transparent strategy along with an AI-powered operating model inclusive of clear-cut consumer-driven policies is what the banks need to prepare for a successful digital future.

The banks after COVID-19 – what will they look like?

The major transformation the banking sector will be experiencing is in terms of their radical shift from dragging legacy technologies to embracing more agile and scalable tech solutions fueled by artificial intelligence through varied collaboration approaches with fintech, big tech and ecommerce companies. When customers would prefer to operate their account online all the time, they would demand better designed, intuitive, and secure applications from the banks.

Digitizing the entire banking system will require a high-performing, interactive, secure, and UX-focused design. A prim and proper UX design guides the customer to complete their intended tasks securely, quickly, and easily. Trust is the core factor in banking and a good UX design would aid in achieving greater customer satisfaction ensuring enhanced customer loyalty.

So, the prime question becomes, how to architect an ideal digital banking solution with UX as its focal point. I believe, for building an impressive, engaging, and resilient digital banking system there are many customer-centric factors the banks will need to consider. The most crucial ones include:

• Simplicity of the UI:The aversion towards adopting online banking is majorly due to the complexity of online experiences, making navigation challenging for the users. Simplified and easy-to-comprehend systems are critical to incorporate when digitizing the future banks.
• Ease-of-use: Banks are now innovating and trying to make it as easy for users to get connected with them and operate their accounts. Apart from simplifying the apps or web-interface, they are starting services like online chat with bank agents, AI-based chatbots, digital identity verification without requiring users to visit branches,  etc., enabling more customers to go digital with ease.
• Attractive UI: The digital space is highly driven by the visual aesthetics and is key to make the right first impressions on the customers. This applies to the banking sector, too. The more compelling and friendly your UI design; the better the customer experience.
• Personalization: From fashion to information consumption, the customer is demanding and embracing personalized experiences and will have the same expectations from digital banking solutions, too. To achieve this, the banks will need a robust AI system for analyzing customer journeys and custom-suit banking products that they need. Personalization will be the key driver for meeting the online sales targets for the banks.
• Transparency and security: Transparent banking processes and the seamless security systems will be the vital principles forming the base of a good UX design. The effective measures to ensure data and transaction security, along with efficient communication will be key to engaging and retaining the customers with more digital products.
• Mobile-first approach: The future of digital banks is in the palm of the people. A Deloitte survey found that out of 73 percent of people globally who use digital banking at least once a month, use mobile banking apps as well as access the bank’s websites through their phones. Taking into account the growing number of mobile users worldwide, banks should be building mobile-friendly apps and responsive websites with customer-focused personalized solutions.
• Digital banking ecosystems: With increased competition from the new entrants in the banking space, the development of ecosystems connecting banks, fintechs, marketplaces, other digital platforms into a single environment, with services being available seamlessly in a few clicks, is inevitable. The customers will soon demand an integrated banking platform and it is the right time to prepare for it.

Be at the forefront of the digital revolution

By the time the world recovers from the aftermath of COVID-19, banking institutions would have seen a vast transformation in their systems, processes, and customer relationships. New future-ready, digital banking solutions will offer as secure, as easy, and as welcoming customer experiences as the brick-and-mortar ones provide. At Maveric, we help banks accelerate their transformation initiatives by integrating domain, UX design, technology, strategy, and execution. We have been enabling banks to achieve their customer satisfaction goals and accelerate their digitization journeys with modern technology solutions. A calculated and well-thought plan and collaboration with the right fintech solution providers will help get you ready for this dynamic and ever-evolving journey of going digital and help you to rise above such extreme situations, now as well as in the future.

This article is originally published on Emerging Payments Association and can be accessed here

The wealth management industry is in the midst of a monumental shift due to changing demographics, the influx of new generation potential investors, transitional global scenarios, and most importantly the rampant digitalization. This pace of change has been long predicted but the pandemic has accelerated its adoption, providing continuous opportunities as well as posing new challenges for the wealth managers to sustain, grow, and strive in the market.

Amongst the factors backing the criticality of the digital transformation lie the most persistent and influencing one which is – the changing dynamics of the potential investors. As per a study by Roubini ThoughtLab, almost 50% of the investors are ready to shift if their expectations are not met. The ground is shifting with the wealth getting passed on from baby boomers to Gen-X and millennials. Also, gender is changing with more women investors acquiring responsibility for wealth management, both by inheritance and their own acquisition.

Even the banking leaders like CITI Bank has been vocal about the urgency of digitalizing the wealth management infrastructure to survive and thrive in the coming years and the bold statement by Rodolfo Castilla, Global Head of Wealth Management Products and Platforms, reinstates that digitalization is the future.

 “We’re very urgent. We know that if we don’t get there first, we’ll be the ones disrupted and killed.”

This is enough testament to realizing that the only way to move ahead and climb the ladder up for the wealth managers is to go digital and have a smart way to go about it.

Essential and founding principles to drive a successful digital transformation

Before we discuss the value propositions and effective tools for futuristic digital transformation and adoption for the wealth managers, we need to gain an understanding of the base principles that will be central to creating sustainable and smarter digital wealth management capabilities. The wealth managers and management firms need to view these principles as the core values to base their digital strategy upon to reap greater outcomes.

• Inculcate a customer-centric approach: Client-centricity is the most crucial variable in the success of any business digitalization and wealth management is not an exception. Becoming a customer-centric organization would need more than just a sound CRM tool and stunning apps with user-friendly UI.

  It needs a far more disciplined approach that sees the client as the foremost pillar of all communications and not vice-versa. The wealth managers need to develop a sound framework to closely understand and comprehend customer journeys to further gain insights into the challenges they face and the solutions they are looking for. A thorough understanding and subsequent anticipation of the client’s need is what will help wealth managers to develop a long-standing and winning digital strategy.

• Focus on multi-generational investor needs: When thinking of the digital-first strategy, some wealth managers only think about the millennial population which is a serious error in judgment on their part. While millennials might hold a larger portion of the client mix, all the other generation clients are also expecting and better responding to digital-first services.  As mentioned in the beginning, the women investors are also a chunkier part of the mix due to their growing income levels and inheritance of family money.

  In short, the advisors need to build their capacity of addressing the varied investment goals of the multi-generational investors and make, the ‘Family wealth office’ a striking reality backed by customization option for aggregate portfolio management.

• Build your investment models on the outcome instead of product: As a customer-centric, digital-first wealth management service provider, it is imperative to build goal-oriented products with room for personalization. The wealth managers will need to break away from the traditional product-based selling approach and will need to sell outcomes in order to derive a greater audience and close better deals.

  The firms should proactively start experimenting and building their outcome-based portfolios that successfully meet the varied short term and long term objectives of their clients.

• Rethink efficiency and drive agility through automation: The banking and financial sector require more complex and advanced technological solutions as compared to any other industry and therefore, a large amount of data analyses and development of a collaborative and secure ecosystem becomes of utmost importance for wealth managers to bring efficiency and agility in their business.

  They will need to closely assess and build automation capabilities that maintain and further strengthen their business value set along with helping the clients to smoothen and fasten the processes.

Think omnichannel – choose a hybrid approach

Go digital but do not forget the human value.

Omnichannel wealth management services are the perfect middle-ground enabling the best of online and traditional face-to-face services. The client of today needs a more DIY-based model with various touchpoints and 24×7 services, making omnichannel a norm for the digitalized world.

Areas that can be automated and delivered through automated channels require robust AI capabilities whereas areas of personalized and holistic advice should be reserved for the human advisors. Hence, exploring a hybrid-advice model wherein the wealth manager can combine the best of Robo and human services to lead a more successful digital path.

Key areas for digital-first initiatives and vital tools for their implementation

Now that we have discussed the prerequisites for digital transformation, let us shed some light on the crucial areas for digital adoption and the most popular, trusted, and safe tools to implement the same.

• Credit decisioning: Covering all the lending products in retail and corporate along with all the risk assessment needs and portfolio analysis, credit decisioning and its management can be automated using AI-driven platforms like Kabbage, Capitalfloat, Ondeck, Fundbox, Fundingcircle and XAI platforms like Google, Thales XAI, Rules AI, AI explainability 360, Temenos XAI.
• Customer analytics: For any strategy to work, customer journeys need to be studied and analyzed deeply to understand customer needs, wants, and expectations. There are multiple data analytics platforms like Monkeylearn, Lexalytics, Meaningcloud Rosette, Clarabridge, etc. for the fintech sector that can be used for successful tracking and mapping of customers.
• Fraud management: Security of financial transactions and confidential information is the number one concern and the most important factor to consider when going digital. There are multiple payment gateways and security-enriching platforms like Fraud.net, PayPal commerce platform, Matlab, SEON fraud fighters, Simility, Feedzai that offer effective prevention from frauds on payments of all types.
• Client due diligence: In the absence of personal touch and wider geographic penetration through online services it becomes important to leverage the use of optimized solutions for CDD. Microsoft Computer Vision, Amazon Rekognition, Google Cloud Vision, DeepPy, Nanonet, and the like can be really effective in offering effective CDD solutions.
• Interactive engagement: Adding a human dimension to all the digital channels enable better personalization of services and tools like Video API-Vonage, EnableX, Mux; Hybrid chat- Liveperson, Now, Rulai, Manychat, Bant, etc., are great assets to enhance the human capabilities of the digital approach.

Conclusion

Client-centric, advice-oriented model will form the backbone of digitalization for wealth managers looking to thrive in the near future, and adopting a hybrid strategy that intermingles automation with the human touch will ensure greater success and wider innovation driving enhanced customer experiences. Maveric’s proven record in developing and offering best-in-class fintech solutions can help the wealth managers in achieving unprecedented digital growth through a cost-effective and optimized model.

This article was originally published on Outlook Money

The banking world is going through a significant change with rising digital consumerism, technology disruption and regulatory compliance. FinTechs, Neo-banks and Challenger banks have redefined “banking as a platform” to offer customers with non-financial and life-style services beyond just traditional banking services. These growing drivers are necessitating banks to relook at their core system, for enabling it to be more future ready and consumer friendly while staying compliant. Additionally, the current pandemic has led to the emergence of digital banking.

What does the term ‘Connected Core’ signify?

Today, for financial organizations to operate out of a ‘Connected Core’, two pertinent notions need to be well grasped – Conscious contextualization and Comprehensive Competencies. Both the concepts will need longer expositions, but for our purpose here, let us briefly unscramble the two.

• Said simply, conscious contextualization in a Temenos implementation context is to validate that all the layers of ALM are designed and equipped for the reliability of the core banking application. It incorporates rapid development, build, deployment (across CI/CD pipelines), maintenance and support, through integration with other solutions (like customer on-boarding), for ecosystem enablement of the Temenos Suite of products.
• Comprehensive competencies on the other hand, is the product proficiency and the application mastery across the entire suite of Temenos applications. This cuts across the processes you deploy, the skillsets you on-board and the best-of-breed methods you reflect

The promise of a “Connected Core” includes all the platform led managed services for modernization, migration and maintenance. Having spoken about the broader picture, let us understand the underlying business imperative for a specific Temenos Transact (T24) transformation context, namely from Transact TAFC Runtime to TAFJ Runtime.

In the age of digital banking, banks must stay ahead of disruptive technology curves. Thus, the modernization of the core banking system becomes extremely critical, by staying on top of its latest release, using a robust upgrade and migration strategy. Upgrading also allows banks to avail newer and better functionalities.

What does TAFJ entail?

Temenos TAFJ embraces java technology, thus enabling banks to take advantage of the latest technologies. TAFJ helps banks to unlock the benefits of digital banking through seamless integration with contemporary technologies like Open Banking (APIs and microservices), Artificial intelligence (ai), ESBs/Message brokers, Data streaming, analytics, responsive UI, progressive web apps, IoT, richer user experience and usage of social media.

TAFC runtime is based on C language, while TAFJ is based on Java language. However, by extending support for INFOBASIC language on TAFJ, Temenos has not disrupted the way Transact (T24) developers have been coding. However, with TAFJ, developers can develop Transact customizations on Java too, to take full advantage of the technology.

Maveric conversion approach for TAFC to TAFJ

Broadly speaking, the approach incorporates four steps.

• Discovery: Standardized templates to speed-up discovery and evaluation of the current Temenos Transact implementation.
• Compatibility: Validate the compatibility of the existing IT infrastructure for TAFJ
• Conversion:
  • Data – make the existing data compatible for TAFJ
  • Code – seamless migration of the existing code base is performed through Maveric Code Integrity Assistant (MCIA) to make the code compatible with TAFJ
• Testing: Finally, Business Consultants and Testers are engaged in the SIT and UAT of the converted environment to make sure nothing is lost!

We believe the top-three gains of moving to TAFJ would be:

• Better utilization of your existing investment on Temenos Transact
• Be in the frontline by capitalizing on the technology enablement of Transact through TAFJ
• Integrate Temenos Development Lifecycle with your existing CI/CD pipeline

As banking is rapidly moving towards branchless banking, the need for being on top of the next technology revolution is mission critical. This means, TAFJ conversion becomes all the more important for banks to gain a substantial competitive edge and shine their connected core.