Selecting the right digital banking solution is one of the most important decisions banks and credit unions need to make. Consumer and business expectations of digital banking have increased substantially over the last decade. Those institutions that fail to design a compelling digital experience may lose customers to direct competitors, as well as to neo-banks and fintechs.
Despite the benefits of switching to a modern digital banking solution, doing so comes with risks. The potential impact on customer experience, complexity of integrations, operational challenges, and other costs make changing digital banking solutions second only to migrating the core banking system in terms of risk. An inadequate solution, or problems integrating it, may be immediately visible to customers.
How to select the best digital banking solution
Whether banks and credit unions should upgrade their current digital banking solutions depends primarily on how well their current solution meets their business objectives, overall product set, and target audience. Banks and credit unions still using a legacy solution from their core banking vendor, such as those with basic account balance and transaction viewing functionality, might find it particularly worthwhile to explore their options.
Sorting through those options can be daunting. The marketplace has grown from a limited set of simple solutions provided by traditional core banking vendors to a broader range of solutions from both core vendors and new entrants. Although it is impossible to choose a single solution that is best for all financial institutions, the five considerations below are a starting point for the decision-making process.
Five keys to successfully upgrading digital banking solutions
Evaluate key drivers for switching digital banking solutions
Determine if the expected benefits outweigh the costs. For example, do you need new functionality that you cannot get with your current vendor? Is there a customer segment or business opportunity you are not able to pursue?
Align your decision with your business strategy
Balance your short- and long-term considerations. Make the decision in context of other solutions that interact with digital banking such as customer engagement platforms, pricing tools, payments rails, marketing analytics, and chat bots. Do not look only at current key purchasing criteria but forecast what you may need in the future. For example, consider whether you will continue to have separate retail and business platforms or expect to combine them. Given the effort required to switch, you will likely have your digital banking provider as a vendor for at least four or five years.
Avoid defaulting to your vendor’s new solution upgrade
Look at alternatives and explore what those options might be able to give you. Your current vendor's new solution might be the right choice, but keep in mind that selecting the wrong digital banking partner could have significant business implications.
Select a vendor that will be a business partner
Identify a vendor that will grow with you. This means validating that their investments in functionality and their product roadmap match your vision and growth trajectory.
Choose a vendor with a proven implementation track record
It can be easy to overfocus on platform functionality and technical capabilities. In the selection process, it is important to understand how the vendor will support implementation and engage with your teams. It is critical to ask for proof points like case studies and references, and to evaluate the resources they would provide to support your implementation.
As the digital banking experience becomes more important to customers and the marketplace of solutions grows more complex, banks and credit unions must carefully weigh their choices when upgrading their digital solutions. Our report “How to Modernize Digital Banking,” can guide you through the digital banking landscape and the decision-making process to ensure you find the best choice for your institution.
