An Important Discussion…
If your bank has a core vendor with a contract written before 2000, it may be time to sit down and have a conversation. Many of your competitors are moving to digital platforms to serve their customers, and most core vendors have plans to switch from their legacy platforms to digital ones. Before you change vendors or stick with the status quo, you need to ask a few pertinent questions to help you understand your vendor’s position and how it can help you as you move forward.
What is your plan for moving to the digital world?
If your system was written before 2000, then it is likely a legacy system. At this point, your vendor has made a plan to move to the digital world, and they may already have products you could tap into to meet your customers’ needs better. Ask your vendor about this.
If the vendor indicates, they cannot yet move to the digital world, ask when they will get to that point. If they suggest they do already have some digital products and services, ask about those. Specifically, ask if you can use digital applications to serve your customers now or if this functionality is down the road.
What is your position on Open APIs?
Application programming interfaces (APIs) allow banks to share customer data with third parties. This may allow a credit card company to analyze the transactions a customer makes to determine which credit card product would best fit their needs. Yet, they also have a distinct benefit within the financial institution, helping internal processes move more efficiently by keeping customer data accessible to those who need it to make financial decisions. Open APIs end up being an integral part of a technology solution for today’s bank.
APIs also give you the ability to produce customer-facing apps and processes. The open API allows the app to quickly access the customer’s information within the core banking platform, so your customers can do business through their mobile devices. This is where your questions need to focus.
Ask the core vendor if their open API will give you access to customer data within the core without the need to maintain and update a fixed interface. On the customer side, ask what limitations your customers may encounter with the API. Ensure the vendor’s approach to APIs fits your needs and goals for the future of your bank.
What is your position on Open Banking?
Once APIs are in place, you can create a customer-friendly open banking scenario. This better meets the needs of the modern customer. To do this, you need a network of open APIs that can be accessed both internally and externally to create a banking-as-a-service platform and improve your customers’ experience. That requires your vendor’s help. Ask the vendor if they have embraced Open Banking. If they have not, ask when they will be at that point.
Where do you stand on Real-Time Payments?
Real-Time Payments are something your customers need. Ask whether or not the vendor has a Real-Time Payments application in place or in development. Some are using proven platforms like Zelle or its competitors, while others are working to develop ACH real-time payments or working with Federal Reserve real-time payments. All are good choices, but you need to understand where your vendor is looking for this service because your customers demand it.
Remember, this is a conversation you are having with your vendor and nothing more. You need to know where they stand on these digital transformations so that you can make informed decisions about your bank’s future. If you find that the vendor is not prepared as you would like them to be in one of these areas, take a moment to find out when they plan to be. If you feel the vendor is falling behind, consider negotiating a contract with someone new when your agreement is up for renewal. Only through the conversation will you get the direction you need to move forward with your digital transformation successfully.