The great divide

For a while, we have seen a divide in the banking industry between the new digital challenger banks and incumbent banks, but a sub-divide between the traditional banks is increasingly becoming apparent too.

Some of the traditional banks are exploring new ways of doing business, such as using cloud-native technology and collaborative structures which may also involve outsourcing their systems to third parties. So how come some of the traditional banks are continuing down the old and lonely road? The answer, legacy cultures that are accustomed to resisting change.

As technological enhancements combined with new Instant Payments schemes and legislation like PSD2 started to dictate the agenda, traditional banks were quick to create and fill new digital roles. We have all met them; the Chief Digital Officer, the Head of Digital Transformation, and so on. Tasked with the impossible - to digitalise a monolith bank.

But digital is so much more than offering a mobile or smartwatch app. It is about an organisational culture that can navigate and react quickly in a hyper-connected world. It is about understanding how data-driven relationships can be used to develop more predictive and personalised services. It is about understanding how open banking fits into the wider digital environment. Fundamentally, in the new hyper-connected world there simply is no room for a monolith mindset.

Banks that turn to third parties and outsource many of their systems and services are in a unique position to establish themselves as finance hubs. By focusing on providing the best service available, rather than building the service themselves, banks can become an integrated part of their digital customers’ life.

So what is separating the forward-looking banks from the die-hard incumbents? It is the recognition that there is a problem and that something has to be done about it. Finally, it takes really strong leadership to make hard decisions and lead with a vision that is clearly articulated.

At Form3 we are working with numerous banks that are entering into the open digital world, helping them migrate from expensive on-premise legacy payments technology to cloud-native Payments-as-a-Service. By partnering with Form3, banks can focus on providing personalised services for their customers, while Form3’s highly scalable and secure platform removes the complexity of managing critical and evolving payments infrastructure.

Please contact Form3 to learn more about how our platform can take care of your entire end-to-end journey of payments, from the moment a payment is instructed, right through the processing, clearing, and settlement with national and international payment schemes.