A report written by the Economist Intelligence Unit on behalf of Temenos looked at the reality of digital banking and found that 51 per cent of banks said a top priority was improving product agility.
Temenos’ global business solutions director Mark Gunning said banks had realised that traditional legacy technology stacks had left banks vulnerable to losing customers to neobanks.
“Neobanks with digital, cloud-native platforms have taken customer share from traditional banks by adopting digital-first strategies but traditional banks are fighting back,” he said.
With the rise of neobanks in Australia, Mr Gunning said that the lessons that were being learned in Europe could be translated to the Australian market.
The report found that those banks were focused on rapidly bringing to market personalised products that would create a micro-bank in customers pockets.
To achieve this, banks were opening up their APIs to allow developers to rapidly create new services as a direct response to the agility of neobanks.
Mr Gunning said global banks were embarking on an ‘arms race’ to provide tailored banking to the demands of various demographics.
“Creating the bank of ‘you’ is now an imperative for global banks which are embarking on an arms race using cloud technology to create micro banking tailored to the demands of different age groups, wealth and income levels, and geographic locations.
“This is creating a future where the bank chooses you: developing services precisely tailored to lifestyle and life needs – with real-time payment and transaction apps,” he said.
Banks were also focused on changing customer behaviour and demands with 58 per cent saying changing demands would have a bigger impact than new technologies said Mr Gunning.
“Innovation is being driven by customer appetite for new technology and it’s the biggest issue and opportunity facing global banks.
“The result is that even the biggest global banks are having to think and act like start-ups, adopting new technologies located in the cloud that allow rapid and agile product development tailored for use across multiple channels (from desktops to tablets and mobiles),” he said.