Blog· 8min June 28, 2021
Their success can be attributed to a mixture of extraordinary customer service, perfect timing and lightning-fast speed-to-market for new products.
Incumbent banks are acutely aware of the detrimental impact to their businesses. They have been relying heavily on their sheer scale and market dominance up to now, but this is slowly showing signs of erosion.
In February 2018, Revolut announced that they had hit 1.5 million active customers, a figure that had grown to 10 million by February 2020. The incredible acceleration of new customers joining these online only banks has been mirrored by the Berlin-based N26, and fellow London headquartered Monzo. Looking at the number of active customers is perhaps the most accurate depiction of customer growth of challenger banks but are these primary customer accounts or just accounts? Much of the population using these digital accounts also have other primary bank accounts.
Nevertheless, for incumbent banks, payment infrastructure modernisation and adoption of new banking technology is a painstaking 2-3 year multi-million-pound project. This is perhaps one reason why they have been slow to adapt.
In the last decade, new banking technology innovations and changes in regulation have brought a new set of challenges that cannot be ignored. The arrival of Covid-19 has proved that substantial change is possible, even amongst traditional banks. Suddenly, businesses that were once touted as being impossible to operate remotely found themselves with no alternative.
The thing is: legacy banks don’t have an alternative to modernisation either.
A 5-year+ banking infrastructure transformation investment plan has just been accelerated to half that time in order to adapt to the new normal. Covid has made sure that there has never been a more poignant time for incumbent banks to modernise their payments estate for the digital age.
But although this process is well underway at the front end, investing in back-office infrastructure is still some way off. The front-end transformation is inherently limited by the quality of the core/back-office processes. So why, when this is the key component, the core engine that handles the critical mid layer, the payment processing that gets overlooked. Core payment infrastructure done well has the power to turn an average bank into a highly agile, low risk, low cost, super-efficient, brilliant bank.
The short answer to this question is that customers care about real-time movement of money and real-time accurate information. Processing speed is only part of the solution; giving customers direct visibility into the payment status is also important (for all payment types).
We’ve outlined a few of the reasons for this below:
Whether you’re an emerging bank looking to capitalise on real-time payments and API connectivity into schemes or you’re a legacy bank wanting to bring your payments infrastructure to the next level, Form3 provides the critical payment infrastructure technology needed to de-risk, optimise efficiency, reduce costs and free up bank resources to innovate and deploy new products and services quickly.
Chat with Form3 today to find out how moving to a cloud native platform will transform the way you manage payments in the future.
Nick works at Form3 as an Enterprise Programme Director and is responsible for the end-to-end relationship and delivery for the largest clients of Form3. In his spare time, Nick loves flying his microlight, riding adventure motorcycles, kayaking in the Mediterranean and spending time with his family, not necessarily in that order!