Of Special Interest
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- Millennials’ needs are changing the face of banking industry, says new report
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- ‘Which?’ reveals Scotland has lost over a third of its bank branches in eight years
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- The US will be a key offshore centre in 2019, says GlobalData
- Debit industry changes markedly in 10 years of the Debit Issuer Study
- UK's ‘Big Five’ face ‘too big to compete’ as small challengers secure stellar returns
- Banks as vulnerable now as before crash, says new study
- Leverage ratio a constant conundrum for European and US banks, says SNL
22nd December 2020
US banks see IT modernisation as a way to improve customer experience
Many large banks in the US have engaged in long-term digital modernisation efforts focused on improving customer experience, with new banks focused on cloud-first and API-first banking-as-a-service opportunities, according to a new report published by Information Services Group(ISG), a leading global technology research and advisory firm.
The 2020 ISG Provider Lens Banking Industry Ecosystem Report for the US finds smaller banks in the country also looking for digital transformation, with many focused on modernising their IT infrastructures in a single “big bang” approach. Many small banks are consolidating, creating the need for a single core banking system, the report says.
Many of the IT modernisation efforts are tied to efforts to improve customer experience, the report says. In the past, US banks focused on improving the front-end of the customer experience, by creating customer-friendly apps and websites, but these efforts are no longer enough to remain competitive.
"Banks need to re-think their internal systems and operating models to respond to rapidly changing customer needs and to tap into the emerging FinTech ecosystem", said Owen Wheatley, ISG lead partner for Banking and Financial Services in the Americas.
“Customers are in control as switching costs plummet, millennial buying power increases, and non-traditional banking models gain market share. The ability for banks to attract and retain customers is more critical now than ever.”
The report sees a growing demand for alternative payment systems in the US, with digital payments not necessarily replacing cash and card services, but supplementing them. Alternative payment systems such as e-wallets and real-time payments are no longer a value-add service but a must-have for major banks in the US. The COVID-19 pandemic has driven up the demand for cashless payment alternatives.
In addition, US banks are streamlining and optimizing their payment systems, as significant operating costs are tied to transaction and processing fees, the report says. The focus is on reducing costs as well as seamlessly offering alternative payment options to customers.
Banks are also looking to revamp their know-your-customer and anti-money laundering systems, with artificial intelligence tied to these services considered a driving force behind digital banking, the report adds. Many banks are moving to automated anti-money laundering checks to improve speed and reduce false positives.
The 2020 ISG Provider Lens Banking Industry Ecosystem Report for the US evaluates the capabilities of 28 providers across four quadrants: Core Banking Platform Implementation Services for Retail, Core Banking Platform Implementation Services for Corporate, Payment Ecosystem Services and Know-Your-Customer/Anti-Money Laundering Services.
The report names Accenture, Infosys and TCS as leaders in all four quadrants. Capgemini is named as a leader in two quadrants, and Atos, Cognizant, DXC Technology, FIS, Fiserv and IBM are named as leaders in one.
In addition, Atos, DXC Technology, Hexaware, LTI and Wipro were named Rising Stars—companies with “promising portfolios” and “high future potential” by ISG’s definition—in one quadrant.
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