The 10 most useful lessons from more than 10 years of experience in building digital banking platforms. Part 229 August 2022
In the previous post [link], we discussed the first five lessons that we can draw from our experience in building digital banking platforms. Now, it’s time to show you the next five lessons. In this part, we will talk about algorithms, open banking, microservices, VAS (value-added services) and sustainability. Let’s get right to it.
Lesson 6: Algorithms and rules are useful, but they don’t have an answer for everything
In general, financial systems are based on rules and regulations. Thanks to intelligent algorithms, you can code many different variants and scenarios and automate actions for various situations (e.g., when a customer applies for a loan). Without a doubt, AI can help banks solve many problems and automate tedious tasks.
These algorithms are being used even today to:
- Prevent fraud and money laundering
- Streamline credit scoring
- Offer new personalised products and services
- Make more informed business decisions and investments
- Support customers in managing their home budgets and much more
However, rules and AI can never replace collecting and analysing real-life knowledge about the customer and their life. Banks can use these solutions as support in their work, but working directly with the customer is still immensely important.
Lesson 7: Forget about open banking
As our experience shows, open banking is a myth. Customers have no interest in cumulating all their savings in one place as it poses a threat. Besides several scenarios (e.g., when applying for a loan or a mortgage), exchanging data between various bank accounts is pointless when you can’t really manage them (only view them).
Furthermore, open banking creates a lot of challenges from the technical and legal points of view. Each bank has its own technology, and combining different accounts is a bit like trying to get Windows and MacOS to work together on one computer.
This doesn’t mean, though, that banks shouldn’t create their own ecosystems for customers. Here, Apple is a perfect example – their products and services brilliantly work together. Banks can offer a whole range of value-added services that are built-in into their systems, e.g., access to public institutions, bus tickets, paid parking systems and many more. This way, the bank becomes an umbrella for the financial front end.
Lesson 8: We live in a world of microservices
Some time ago, applications and digital platforms were built as so-called monoliths. You could use the whole product or not use it at all. It was the same story with updates and modifications – it was necessary to rewrite almost the entire codebase to implement some larger changes.
Recently, a different approach has gained traction. Microservices enable web developers to build apps and platforms that have various functions and sections that work independently. So, if you have a mobile banking app and you want to implement the new payment option, you can do so without modifying the whole thing.
Such an approach comes with several benefits. For starters, updating and modifying digital banking platforms is much easier. It takes less time, is easier and, therefore, cheaper. Secondly, thanks to microservices, digital platforms are more user-friendly and versatile. And lastly, the business has now the possibility of configuring the product without the involvement of the IT department.
Fintech companies have started this revolution in the banking sector. Thanks to them, the industry now has access to thousands of ready-made components and solutions that can supplement and enhance your digital product.
We encourage you to take a look at our Aion Bank app and web banking project. Together with the client, we have created a whole library of diverse user interface components, some of which have been developed for the first time on the market.
Lesson 9: Offer value-added services
In the introduction to this post, we told you that banks are no longer places where you just store money. Today, they help customers accomplish their goals and carry out everyday tasks.
Here, Bank Pekao, with its PeoPay 4.0 mobile app is a good example. This Polish bank simplifies its customers’ lives by expanding the offer with non-banking services related to daily payments for parking, tickets, motorway travel and more.
Lesson 10: Think about ecology and sustainability
More and more consumers value green initiatives. It’s the same story in the banking sector. That’s why banking companies offer their customers virtual credit/debit cards (that are not just green but secure as well) or standard physical cards made of recycled or ecological materials (e.g., plastic waste or metal). Banks try to limit their impact on the environment and encourage customers to track and lower their carbon footprint.
For example, MasterCard has developed a carbon calculator. It enables customers to view the estimated carbon footprint of all their card purchases. And some time ago, Revolut started offering virtual single-use cards whose details refresh once the purchase is complete. It’s not just a green solution; it’s 100% secure as well.
We can expect that in the near future, every decent bank, financial institution and fintech will pursue green initiatives, both when it comes to their operations and habits and actions of their customers.
Summary: Design solutions for the digital world
What conclusions can we draw from these 10 lessons that we discussed in both parts of this article? The crucial one is this: If you want to thrive in the modern financial sector, you need to adopt a digital mindset. Design flexible solutions that are quick and effective, especially when it comes to on-demand services. Your digital banking platform should be an umbrella for the entire ecosystem, offering not just impeccable customer service and security but also a whole range of value-added services. Today, banking platforms are updated once every two weeks, and their services and mobile apps are continually developed. That’s the only recipe for success.
Moreover, banks mustn’t forget about online security, ecology (paperless service and virtual cards), CSR and local activities. This way, they can be a valuable part of their customers’ lives.