AUGUST 20248Ask any banking executive about today's defining competitive differentiator in the banking industry. The answer will almost certainly be CX. Financial institutions that get this right are guaranteed higher recommendation rates, enjoy more account switches, and are better placed to offer a broader range of products or services to their delighted customers. It's why many legacy banks have finally begun to overcome their fears around core bank replacement and started to embrace the digital transformation pioneered by challenger banks by investing in core banking platforms such as Engine by Starling. By switching to the cloud-native, modular architecture enjoyed by neobanks, any bank can be more agile in response to customer feedback, seamlessly scale or descale according to changes in demand or market conditions, and ensure that real-time services are available 24x7, with no downtime. These are just some ways a modern bank can deliver a highly personalised customer experience that helps solve real customer problems.Yet, while CX is indeed crucial, there are other strong arguments in favour of the switch to modern banking systems too. TalentThe success of any business depends on its people just as much as its technology. As any banking CIO will know, our industry is in the thick of a war for talent, particularly engineering talent. It's been estimated that those charged with keeping legacy banking systems running get to work on the exciting stuff for 30 per cent of their time, with much of their schedule taken up with fixing issues. If you were an engineer at the top of your game, where would you prefer to be? Top talent today wants to work with cutting-edge technologies and is drawn toward organisations that deploy agile principles. Cloud-native tech stacks are attractive to the most innovative among this group. They recognise that working with next-generation core platforms frees them to focus on delivering new and innovative features. Banks that stick with (and struggle with) a legacy system will find it increasingly hard to attract new team members.The bottom lineSwitching to a next-generation core banking system offers a reduction in IT operating costs of up to 50 per cent. There's also improved ROI, with the lowering of upfront costs that come with making changes to products and services. This money can be further invested in creating products that generate revenue and deliver new functionality. In all cases, this seems like a better investment than spending two-thirds of an IT budget on patching up outdated systems. Plus, as everyone knows from the news in recent months, there is a lot of M&A activity in the banking market. When looking at potential acquisitions, a bank with a more modern tech strategy will inevitably be more attractive.Protection against attackWith an increasing amount of banking transactions being handled via digital channels, banks must maintain a secure system while also considering the liabilities that could result from a data leak. As more software systems and data are integrated into a complex patchwork of systems, there has been an increase in attacks exploiting weak points in this complex architecture. Banks, therefore, must ensure their infrastructure is configured securely to protect against harmful breaches. The core banking platforms pioneered by challenger banks like Starling Bank were born in the cloud and understood the potential challenges. Platforms like Engine, therefore, have WHY MOVE TO A MODERN BANKING SYSTEM?By Sam Everington, CEO, Engine by Starling, Starling BankMY OPINIONIN
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