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How to launch a digital bank in 10 months or less

Ben Goldin, CTO of Mambu

Digital banking is the future of financial services. Institutions are rethinking nearly every aspect of their operations to take advantage of the opportunities digital engines can create.

Consumers- particularly millennials- are demanding the enhanced levels of service, simplicity and personalisation that only a truly digital bank can offer. By digitising and optimising the back office, banks can use advanced data analytics to provide customers with tailored experiences and products across physical and digital channels.

Bank leaders need to reassess which parts of their strategy and business should be analysed and adjusted for a digital-first model. Can institutions launch a digital bank in 10 months or less? It can be done, and it has been done. Let’s look at five elements needed:

Building Modular Architecture

To continue meeting consumers’ ever shifting demands, banks need to roll out products and services at a previously unthinkable pace. Think of how Google is constantly adding new features to its platforms while enhancing old ones. Fintechs create more intuitive features stemming from a nimble platform that can quickly and continuously be enhanced. A truly agile platform undergoes short, frequent releases with a constant pipeline of improvements that are stacked on top of commoditised cloud infrastructure and allows business to run uninterrupted on the front end. This allows minor changes regularly, rather than huge, infrequent ones that can cause major disruption and draw customer backlash as has been the case with some traditional transformations.

Digitise and Automate

Each year banks spend untold millions on duplicative efforts in their current, siloed, legacy systems. In switching to a digital platform, banks can shed that infrastructure and gain the ability to digitise and automate their core processes all while eliminating errors and duplication. Integrating process gives banks a single view of customers and allows them to provide a customised experience by defining their needs based on behaviours.

Embracing APIs

Among the most interesting digital banks in operation is N26 which is available in 24 countries with over two million customers as of November 2018. Through APIs, they employ developers to build programs and services around its core functions to help it become “an intelligent hub for a customer’s entire financial life.” API-driven collaboration and the business models growing around it are part of a larger business trend pioneered by today’s technology titans. Those that embrace it will enjoy faster growth thanks to a crowd-sourced effect that creates previously unattainable momentum in developing new services to meet customers’ needs.

Creating Smart Products and Services

Any financial institution is handling large amount of financial and non-financial data, that can be used to create competitive and unique business products. The data can be used to create personalised financial advisory, straight through credit decisioning, fraud detection and prevention capabilities and many other targeted and innovative services. Combined with modern agile practices, such as Continuous Delivery, as well as product management practices such as Hypothesis Driven Development, experimentation and user-centric metrics, can help to set themselves apart and ahead of their competitors.

Securely Managing Customer Data

As consumers’ lives become increasingly digital, the need to be a good steward of their critical personal information is paramount. The good news for those that make the transition from less secure legacy systems to cloud digital platforms where security improvements are constantly made, is they can boast greater peace of mind and set themselves ahead of competitors. If banks embrace new technologies, they can offer added security to customers while seizing upon advanced analytics to automate and streamline decisions across the end-to-end banking value chain.

With a proven digital engine and broad developer collaborations, banks can build innovative integrations into any customer-facing channels, payment providers, and other complementary SaaS offerings for simple, streamlined and automated customer experiences. As the fintech age forces institutions to digitise, innovate and scale to adapt to customer needs, those that can move at the pace of a technology company while remaining committed to strength, security and service will be the leaders of this new era.

About Mambu

New financial technology is opening up previously unserviceable markets and is raising consumer expectations. They want tailored products, great user experiences and simple fast fully-digital services. But most banking technology is just not well suited for this world. Institutions simply aren’t able to build, launch and change products fast enough. This makes it difficult for providers to compete and differentiate in rapidly changing market. Mambu changes this.

It is the lean alternative to cumbersome core banking systems, a cloud-native software, provided as a service, supporting composable API-enabled ecosystems. Mambu empowers our clients to operate like a tech company rather than like a bank. Helping them to successfully start up new business ventures, transform existing operations, launch new products and expand into new markets. We provide more than just a solution, working as close partner with our clients from executing their vision to constantly evolving it with them as the market changes.

For more information, please visit our website or connect with us on Twitter, LinkedIn and Facebook.