It’s not just new technology, new business models and a keen understanding of a new generation of consumers that Fintech firms are deploying to win market share from incumbent financial service providers. Fintechs have also embraced new approaches to product release cycles in anticipation of fast-evolving customer demand. How can banks compete?
Through agile software development (sometimes dubbed ‘fail fast’) nimble newcomers in the finance sector are pushing out new tools, tweaks and added functionality on an almost continuous basis. If digital feedback flowing from a mobile app suggests the need to fix a glitch or add a new feature, the fleet-footed Fintech player is geared up to respond in days if not hours, pulling in developer and other resources via the cloud if necessary.
Incumbents risk being left behind in the race to satisfy client demand. Although there are some good reasons why banks’ release cycles are much longer – including trusted customer relationships – time lags also arise from legacy systems and platforms, as well as rigid workflows and processes. A recent report from McKinsey’s global banking practice insisted banks must “rapidly leverage and deploy the next generation of technologies, from mobile to agile to cloud” to keep pace with their new competitors, highlighting the use of new software development techniques.
Competition as catalyst
Many are taking the threat of Fintech competition as a catalyst for change and refusing to wait in line until the requisite IT resources become available to support an urgently-needed release. But embracing agility takes more than a sense of urgency. To match the development cycles of Fintechs, incumbents must also have ‘on demand’ access to the human, technology and network resources needed to identify, design, test and deploy a solution.
For example, for a new mobile app to add value to clients, it must be built and deployed securely and quickly, and it has to be robust and responsive too. For a bank operating under tight capital constraints and with an already over-burdened legacy operating infrastructure, this is not easy. It may require access to distributed computing capabilities, high-performance networks, and other third-party capabilities. It may also require use of the cloud, to minimise impact on existing in-house systems, networks, and other balance sheet resources.
At Telstra, we see strong demand from financial service providers for network solutions that not only deliver access to the capabilities that can drive innovation and responsiveness to market demand, but also meet established expectations in terms of security, reliability and cost-effectiveness.
Banks are increasingly leveraging emerging capabilities such as Software Defined Networking (SDN) and Network Function Virtualisation (NFV) for example, to quickly configure flexible, hybrid network environments. These allow them to rapidly deploy new applications and services in response to evolving customer demand, without constraints imposed by existing processes, technologies or balance sheet limitations. This means finance sector firms can bypass legacy provisioning and management IT systems, improving activation times from weeks or months to minutes, while also simplifying network management significantly.
Satisfying customer needs
Such platforms deliver high-performance, reliable and secure networking, but backed by the speed, flexibility and cost-effectiveness that firms require to compete effectively in today’s disrupted and dynamic finance sector. Responding to client needs with new functions and features is a data-intensive and bandwidth-hungry business. It requires on-demand, scalable access to distributed computing and co-located analytics capabilities as and when required, to minimise capital expenditure and avoiding over-provisioning. Indeed, the competitive landscape dictates firms should settle for nothing less.
After all, when banks’ customers demand high quality, flexibility and responsive service, banks should expect nothing less from their network partners.