With digital transformation at its peak, banks’ reliance on core banking products for seamless integrations and management of core banking functions has been ever increasing (which includes but not limited to traditional Current Account Savings Account services, loans etc). It is true that core banking technology is crucial for banks to stay tech-savvy and relevant with rampant digitization, but does this technology freedom have a flipside to it?
Addressing the Elephant in the Room – Overdependence on Core Products
Just like banks are connected to the functionalities of their core products, they are also limited to the possibilities of trying something new. They often become puppets to such products and innovation gets stifled. What makes a service customer-friendly is when it offers solutions based on a customer’s behavior. This can get hard to achieve when controlled by off-the-shelf products, as they stay restricted to the bounds of such products installed. In such cases, flexibility can be an issue when there is an over-reliance on core products! Apart from flexibility, banks incur unnecessary costs when dependent on core products. Such costs include licensing fees (like software or user licenses), implementation costs (like customizations, version upgrades, reporting, auditing, migrations, and integrations), and technical costs (like training, and technical support).
So What Can Financial Institutions Do?
Embracing innovation is the key. Being overdependent on the functionality of a core product locks the door to innovation. Being open to creativity enables financial institutions to evolve with the financial landscape. This helps build effective solutions and enhance customer experience. In today’s world, customers expect a personalized touch, a source that can aid their problems at any time, anywhere. To deliver an experience so customized, it is necessary to build a middleware. The common layer allows banks with the utmost freedom to fashion services based on customers’ needs and market demands. This middleware, devoid of cloud services, can seamlessly communicate with the core products based on the customizations made at the bank’s end.
What Josh Software developers do is sit with banks and build a platform that allows them to create a personalized approach to banking solutions. For instance, by analyzing user behavior on how they manage their finances or loans, or the mere behavior of navigating through the banking application, can help in evolving the way functions are conducted and make it more user-oriented. It also prevents the unnecessary costs incurred by the bank when partnering with core products.
The Adoption of Personalization in Banking
Statistics predict that banks with around $100 billion in assets have the potential to reach up to $300 million in revenue growth, credit to the adoption of personalization in banking. A data-driven approach empowers banks to reshape their services and offer solutions that fit well with their users’ problems. Thanks to data analytics and artificial intelligence (AI), banks will now achieve the following with personalization –
- Personalized marketing messages
- Customized service recommendations
- Tailor-made loyalty programs
- Personalized mobile banking experience
- Personalized account features
Banks for Middleware Solutions
A middleware acts as a bridge between the core legacy technologies and the banks’ innovative discoveries. By building a common layer, banks can now be less reliant on the core that opens the gate to smoother product deliveries and seamless migrations. Middleware solutions also nurture 360-degree analysis of their customers. It unifies user data into a single platform that gives them a comprehensive view of their users. This enables them to build personalized services and better customer loyalty.
Functional Integrations Where Josh Found Middleware Helpful
Josh Software supports the idea of building a middleware as it comes with many advantages. Some of the functional integration use cases are –
- Integrating new trending payment methods (like UPI): With people gradually becoming more comfortable with UPI transactions over carrying cash and credit cards, it is of utmost importance for banks to integrate UPI facilities. With a middleware in place banks.explore personalized services and offer them to customers that satiate their financial needs – like prompts for commonly made payments for easy use, show trends in spend etc
- Alters and communication: Core products have a standard format and protocol for sharing alerts and notifications, which is definitely limiting. But with the help of a middleware, such alerts can be managed and tailored to customers’ requirements and user behavior. Banks, through middleware solutions, can share notifications for every action taken by customers. Not just that! It is also cost-effective. Asking core products to curate new notifications comes with extra cost. For each alert built, service charge follows. To put a stop to that and save more, having a middleware in place can create user-oriented notifications without incurring any cost.
- Data Analysis: Middleware solutions also help with analyzing data that can capture how customers are using applications and build an interface that aligns with the usage.
- Data Migration: Having a middleware also helps with data migration. If the time arises, migrating to a different platform can be quite beneficial and seamless when a middleware exists, which can be time-consuming and costly with core products.
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