2023 will be another year of increasing levels of investment in modern technology in the banking sector. The pandemic confirmed the need to digitize more banking areas and processes, while the current normalization period is conducive to implementing long-term transformation plans.
A Celent report shows that banks plan to increase the IT investment budgets on average from 4.9% in 2022 to 5.5% in 2023. A definite and consistent direction of investment is the area of transformation of remote customer service channels, specifically, building or upgrading online banking platforms.
By developing remote channels, banks are aiming to increase their market share and become more competitive with fintechs and neo-banks, thus increasing customer volume, relationship and productization levels, and profitability.
Using new technologies can also realize the need to increase automation of processes on the backoffice side and optimize costs in this area. In addition to tangible financial benefits, automation primarily reduces process execution time, which in turn translates into better UX and ultimately improves the NPS metric.
The last, but most important area is increasing the level of security and resilience to various types of threats resulting from the increase in digital traffic.
According to a report by Gartner, in achieving their goals, IT engineers focus primarily on integrating individual solutions into extended open ecosystems consisting of interconnected components. The point is to achieve synergy between component domain applications and optimize the use of services and processed data. This involves organizing data structures and introducing standards in communication, as well as building a solid foundation for the platform at the heart of distributed environment.
In this area, we see a definite continuation of the trend in the use of microservices and micro-frontend architecture allowing for the creation of a so-called composable application that can be expanded or configured at any time. This technology allows each individual component to be a separately managed project, responsible for its narrow domain, resulting in smaller, more manageable teams and more efficient delivery of final value to customers.
In the area of communication between microservices, banks are increasingly opting for the use of REST APIs and focusing on building transparent, open and fully managed interfaces based on the OPEN API 3.0 standard.
The foundation of applications built in this way provides the opportunity to apply further technologies and allow KPIs to increase in business areas.
The first, most prominent trend is the bolder use of cloud computing and the increasing transfer to cloud environments. This allows for optimization in the use of resources and easier scaling of individual services. According to Gartner, by 2025 95% of new IT initiatives will be built on the basis of cloud-native platforms and related service sharing.
Another area that banks are investing in is optimization of customer data. Data standardization and organization of data structures open the path to the use of machine learning and artificial intelligence technologies, both still hot topics.
Banks want to use the data to learn more about their customers' behavior and determine trends so that they can respond accordingly. This will allow building a personalized approach, but also detecting anomalies and mitigating operational risks. In addition to simple recommendations, the use of highly advanced data analysis techniques will also allow for more efficient decision-making, and often complete automation of processes. Here, bankers point to RPA (Robotic Process Automation) technologies, which, enriched with ML or AI algorithms, can take banks' operational efficiency to an unprecedentedly high level.
Author: Grzegorz Urbanski - Product Manager at Comarch Open Platform