Banking Ecosystems: Trading Legacy Rigidity for Ecosystem Flexibility

The banking world is undergoing a major transformation. 

Traditional banks are under immense pressure to meet changing customer needs and contend with newer market entrants equipped with innovative technology. Most run on legacy infrastructure, preventing them from innovating and meeting changing customer demands. Faced with outdated technology and legacy infrastructure problems, they want to gain a competitive edge to hold on to and grow their market share.

This is where banking ecosystems come into the picture. If legacy systems are characterised by rigidity and stillness, banking ecosystems are defined by flexibility and movement. These dynamic ecosystems are helping the world’s traditional banks meet challenges head-on.

Banking ecosystems are the future for traditional banks

While partnerships between the entities that make up today’s banking ecosystems aren’t particularly new, they used to sit on the fringes of a proposition, for example, in digital signatures or identity verification checks. Today, the partnerships coming from banking ecosystems are part of banks’ core offerings.

It’s not just smaller financial services players participating in banking ecosystems, either. Several of the world’s most established banks rely on banking ecosystems to give customers the digitally enabled services they’ve come to expect.

These dynamic ecosystems allow banks to do the following:

Meet changing customer expectations

Customers today expect more than many traditional banks can currently give them: a wide variety of highly personalised and seamless digital financial services. With just 23% of consumers rating their banks’ personalised services highly, banks are under pressure to become more customer-centric.

Banking ecosystems allow banks to integrate with partners, such as fintechs and technology providers, to broaden their service offerings, improve personalisation and enhance the overall customer experience.

Keep up with the competition

Traditional banks are feeling the effects of fintech disruption. Unlike traditional banks, fintechs have the flexibility and agility to constantly develop new technology and services to meet the changing needs of consumers. Through user-friendly apps, personalised communications and financial management tools, niche solutions and a commitment to financial inclusion, fintechs are shaking up banking.

Banking ecosystems provide a foundation for banks to partner with fintechs and integrate their innovative services into their core offerings. This allows them to improve their digital capabilities, expand their services quickly and give customers the seamless and personalised banking experiences they expect.

Create new revenue streams quickly

Establishing new revenue streams has always been a problem for traditional banks. However, to attract more customers and ensure business stability, banks are under pressure to focus on more predictable revenue streams. But there’s a problem: creating these new revenue streams hinges on flexible and agile systems rather than rigid legacy infrastructure.

Banking ecosystems, on the other hand, allow banks to release new products and services quickly. They can integrate offerings such as insurance products and lending solutions, and instead of taking several years to get to market, banking ecosystems can reduce this time to a matter of months.

Meet changing regulations

Banks will never stop facing regulatory pressures. This constant flux requires banks to be agile and adaptable, adopting systems built with flexibility in mind. Banking ecosystems allow banks to adapt to regulatory changes smoothly. Several banking ecosystems offer regulatory compliance product offerings, helping financial institutions with regulatory maintenance, data protection and financial crime mitigation.

In recent years, changing e-invoicing regulations have presented a challenge and an opportunity for banks around the world. Banks are among the best-placed private institutions to help shape the future of e-invoicing and consequently profit from its growth. While European banks are obligated to adhere to new regulations, in the US, the Digital Business Networks Alliance is helping businesses get ahead of the e-invoicing game in the absence of regulatory changes.

Unfortunately, traditional banks that rely on legacy infrastructure aren’t in a solid position to capitalise on the e-invoicing opportunity due to the rigidity of their systems. Michael Wibe, Product Manager at Formpipe, recently penned an article exploring changing e-invoicing standards. He explained that to be compliance-ready, financial institutions needed platforms with interoperability, deep integration and security.

By not embracing banking ecosystems, financial institutions could see higher compliance costs due to the customisations and workarounds required to create value from e-invoicing.

The role of technology partners in banking ecosystems

Traditionally, banks had to do all the heavy lifting when introducing new capabilities, including identifying additional needs, sourcing software vendors, and handling complex integrations. Banking ecosystems, on the other hand, reduce the time and resource burden by identifying the best-of-breed vendors in a given capability space and pre-validating them to ensure they’re of a sufficiently high standard.

Formpipe is proud to be part of several influential banking ecosystems, including Temenos’ Partner Exchange. We’ve been partnered with the SaaS cloud banking solution for over 15 years. We recently won the Temenos Solution Provider of the Year award, recognising us as a Temenos ecosystem leader. 

We’re also proud to be included in Thought Machine’s Integration Library, which connects Thought Machine’s cloud-native core banking engine, Vault Core, with value-adding partners and technology providers. In a recent conversation between Formpipe’s Ben Saxton and Thought Machine’s Randy McFarlane on Formpipe’s ‘Beyond the Document’ podcast, McFarlane explained that document management regularly came up in conversations with customers. So, why is our document management solution, Lasernet, considered best-in-breed by organisations like Temenos and Thought Machine?

Enjoy flexible document management with Lasernet

Lasernet provides banks with the tools to streamline document management, from design and formatting to distribution and retrieval. The beauty of Lasernet is it allows banks to upgrade their ERP systems without upgrading. All you have to do is take the output from any ERP and use modern graphical drag and drop to deliver documents to your customers in the format that suits them. By easily integrating with core banking systems, Lasernet helps banks improve efficiency and data security, ensure compliance with changing regulations and reduce costs. 

Formpipe’s place in these ecosystems demonstrates the power of collaboration in addressing the challenges faced by traditional banks. By engaging in partnerships with best-of-breed solutions like Lasernet, banks can optimise internal operations and improve the customer experience.

Interested to find out how Lasernet complements your core banking operations and overhauls your current time-consuming document management tasks into smooth processes? Get in touch today.