Top 5 strategies British financial institutions should prioritize in their technological roadmap

Main challenges for British financial institutions and how to overcome them 

Experts in the industry anticipate a challenging road ahead for British financial institutions. The current landscape presents a myriad of obstacles, from persistently high inflation and rising lending costs to tight profit margins, increased regulatory demands, and looming cybersecurity risks.

In particular, building societies are feeling the heat from larger financial entities and digital platforms like Facebook, Amazon, and Google entering the realm of financial services. This surge in competition is fueled by consumers' desire for convenience and simplicity in accessing a range of services through a single app.

Navigating through these hurdles is crucial for British financial institutions to stay ahead in the ever-evolving financial industry.

1. Upgrading their infrastructures

Traditional British financial institutions are encountering obstacles in modernizing their infrastructure due to constraints in resources and financial constraints. Building societies are particularly grappling with financial and operational challenges that require strategic management. These challenges include heightened market competition, restricted pricing capabilities, narrow profit margins, and a lack of diversified business models.

As a result, there is a growing trend among community banks to seek fintech partnerships in order to tackle these challenges. However, as financial institutions advance towards transformation, they are facing difficulties in pinpointing the issues their members are encountering and finding the appropriate technological solutions to address them.

2. Fast technology transformation

Despite the widespread adoption of technology by many banks, financial service companies continue to grapple with the rapid changes in the technological landscape. As the digital world evolves at a swift pace, these companies must remain agile in adapting to new technologies and crafting innovative solutions to overcome the challenges they encounter.

As building societies venture into the realm of digital transformation to overcome their distinct challenges, they are met with a complex journey filled with obstacles. Success in this transformation journey hinges on a profound comprehension of member needs and the deployment of customized technological solutions to effectively address them.

3. Competition from non-financial platforms

Fintech companies and other non-bank financial players are shaking up the traditional banking sector by offering a diverse array of services, from online transactions to business payment solutions and loan offerings. These innovative non-financial platforms are swiftly becoming formidable competitors to traditional banks, reshaping the financial services landscape.

The rivalry between traditional banks and non-financial platforms intensifies with the entrance of tech giants into the financial services arena. These industry disruptors leverage their vast ecosystems to streamline customer experiences across various sectors, including banking and financial markets. Their cutting-edge approach to user engagement within non-banking realms offers a customer-centric viewpoint to banking that adapts seamlessly to evolving client expectations and market dynamics.

Nevertheless, traditional banks continue to excel in offering intricate services such as international trade finance and sophisticated wealth management.

4. Customers’ evolving expectations

British consumers are increasingly demanding seamless and personalized experiences similar to those offered by cutting-edge fintech startups. The rise of challenger banks and fintechs has set a new standard for traditional financial institutions, urging them to step up and meet these heightened expectations. The rapid advancements in AI and machine learning technology only amplify this challenge. Failing to do so not only risks tarnishing traditional financial institutions' reputations but also hampers customer engagement with innovative services.

Customers' evolving demands are shaping the future of retail banking, prompting financial institutions to implement adaptable strategies to cater to the ever-shifting needs of consumers or risk missing out on opportunities to attract new clients and retain existing ones.

5.  Talent and skills development 

British financial institutions are grappling with talent and skills development challenges in the digital realm, especially in the wake of Brexit and the evolving limitations on labor mobility. Prior to Brexit, the UK successfully drew in top-tier digital talent from Europe to bolster its prominent financial institutions.

Now Brexit has posed challenges for British financial institutions in attracting European digital talent, potentially placing them at a competitive disadvantage compared to pre-referendum times.

The shift towards digital transformation in banking necessitates a workforce with specialized skills, yet the scarcity of available tech talent presents a formidable challenge not just for banks but also for various industries.

The quest for qualified IT professionals remains an ongoing struggle for banks, widening the digital talent gap within the banking sector over recent years. Despite efforts to recruit new talent, many banks are struggling to keep up with the demand for digital skills and are falling behind in the race for digitalization.

What British banking CIOs and CTOs should prioritize in their technological roadmap?

The financial sector in the UK stands at the forefront of advancement compared to its global counterparts, but there is always space for enhancement, particularly in the realm of technology. 

1. Embrace digital transformation and invest in new technologies

Staying ahead in the fast-paced world of British financial institutions with cutting-edge technologies and innovative processes is key. To enhance efficiency, elevate customer experiences, and optimize overall business operations, banks, building societies, and other financial organizations need to come up with innovative ideas that cater to the needs of their account holders.

This encompasses enhancing hardware and software systems, integrating cloud computing solutions, and adopting groundbreaking technologies such as artificial intelligence, big data analytics, and machine learning to streamline operations and gain invaluable insights. 

Statistica has pointed out a significant rise in revenue for services globally over the past few years. Traditional banks must prioritize undergoing a comprehensive digital transformation to remain competitive in the digital age and propel growth.

2. Foster collaboration with fintechs

Collaborating with fintech firms presents a valuable opportunity for financial institutions to remain competitive and drive innovation. Institutions can effectively tackle the hurdles of digital transformation by leveraging an omnichannel digital banking solution.

Establishing partnerships with fintech companies, technology providers, and fellow financial institutions can propel British financial institutions forward in their technological journey. ebankIT's platform is specifically crafted for seamless integration with a variety of fintech solutions, enabling banks to swiftly adopt cutting-edge technologies without the need for extensive system redevelopment.

This adaptability empowers banks to expand their service offerings, ultimately enhancing their competitive advantage. Through collaboration, institutions can pool knowledge, resources, and expertise to create innovative solutions and stay at the forefront of the industry.

3. Open Banking and Embedded Finance

The financial industry is becoming increasingly competitive, with fintechs and tech giants entering the market. Open banking empowers financial institutions to leverage customer data (with permission) to deliver personalized financial solutions, elevating satisfaction and fostering loyalty.

Embedded finance seamlessly integrates banking services into non-financial platforms, enabling in-app payments and financing options. This strategy not only broadens banks' customer reach but also enhances their market presence by offering banking services within e-commerce platforms or ride-sharing apps, attracting new customer segments and driving growth.

The Data Protection and Digital Information Bill will provide clear guidelines for implementing Open Banking and make it easier for banks to do so. This regulatory clarity will help banks understand their obligations and the steps they need to take to comply, reducing uncertainty and fostering a more predictable business environment.

This standardization can simplify bank processes, reduce compliance costs, and facilitate smoother integration with third-party providers. This bill aims to enhance data security and privacy standards.

By aligning with these regulations, banks can ensure that customer data is safeguarded against breaches and misuse, fostering trust among customers. This transparency can enhance consumer trust in banks, as customers feel more secure about their data privacy. 

4. Prioritize customer experience

Improving the customer experience should be at the forefront of enhancing the technological roadmap for financial institutions. By harnessing the power of technology, institutions can provide tailored services, seamless digital engagements, and convenient self-service options. This encompasses the development of user-friendly mobile applications, the integration of chatbots for customer assistance, and the utilization of data analytics to understand customer preferences and behaviors.

With an omnichannel approach, ebankIT ensures a consistent and high-quality customer experience across all touchpoints, whether it’s online, mobile, or in-branch. This integrated experience helps banks meet the evolving expectations of tech-savvy customers, fostering loyalty and satisfaction.

5. Low code solutions

In response to the limited availability of IT talent and expertise, financial institutions should explore the potential of low-code solutions to streamline developers' workloads.

Low-code platforms offer a swift avenue for application development, empowering banks to efficiently construct, test, and implement new digital solutions. With user-friendly interfaces and drag-and-drop functionalities, these platforms simplify the development process, enabling team members with limited programming knowledge to actively contribute to application creation. Consequently, banks can tap into a wider pool of talent, including business analysts and other non-technical personnel, to drive the development and maintenance of applications.

By lowering the barrier to entry for application development, low-code platforms offer banks the opportunity to cut down on expenses linked to recruiting and training specialized IT personnel. By empowering current employees to acquire low-code skills, banks can enhance the efficiency of their workforce, diminish the reliance on costly external developers, and maximize the value of their existing talent pool.

How ebankIT can help

Overall, community banks in 2024 need to address these challenges by adopting scalable strategies, promoting human interaction and personalized services, embracing technology, and effectively managing risks.

For British banking CIOs and CTOs, fostering collaboration with fintechs is essential for driving digital transformation and maintaining a competitive edge. An omnichannel digital banking solution like ebankIT offers the integration capabilities, enhanced customer experience, streamlined operations, scalability, data-driven insights, and security needed to overcome digital transformation challenges effectively. Embracing such a solution can position banks for long-term success in an increasingly digital financial landscape.