Customers–both consumers and business users alike–are more exacting than ever when it comes to digital banking–and many of their demands are going largely unmet.
In a recent survey of bank customers:
52 percent of said their banking experience is not fun
44% said that their banking services are not personalized
30% said that banking services are not as seamless as they would like
Banks are working to fix these deficiencies, largely by seeking to ramp up embedded finance offerings, with 92 percent of banks reporting that they are currently or planning to implement embedded finance experiences.
However, embedded finance capabilities can be difficult or impossible to build and run on the outdated core systems that many financial institutions still rely upon. Many banks are focused on digital core modernization and a recent survey found that 58% of banks’ mainframe systems were between five and 10 years old, 27% were between 11 and 20 years old and 9% were 21 years old or older.
Amid those conditions, banks face a difficult choice: go deep into the red to bring their legacy systems up to par or lose out on customers when they cannot provide satisfactory experiences.
How the Cloud Can Help
Cloud migrations can offer banks an efficient way to upgrade their core systems and enable embedded finance solutions–and banks are taking notice. Eighty-two percent of FIs plan to migrate more than half of their core systems to the cloud over the next two to five years, including one in four that plan to move more than three-quarters.
Driven by that demand from FIs for cloud migration, core banking solutions are expected to get a massive shot in the arm. Experts project that the core banking market is expected to expand by $12.1 billion by 2026 at a compound annual growth rate of 15%.
“Over the past decade, financial service providers have invested heavily in enhancing the user experience offered by their digital products–an effort that has driven significant advances in how such products look, feel and operate on the surface level,” noted Miguel Santos, CEO of core banking technology provider Technisys.
It’s a big job, but that fundamental-level tech enhancement will be a vital step in enabling banks to remain relevant in the financial services landscape of tomorrow, the Technisys head stressed.
“To evolve as the market evolves is essential for those FIs that want to continue to compete and win in the next phase of the digital financial services evolution,” Santos said.
Want to Learn More?
In the latest Embedded Finance Tracker®, a Galileo and PYMNTS collaboration, learn more about how banks are adopting cloud technology to power the embedded finance offerings their customers demand.
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