U.S. Banks Turn to Technology Providers to Transform Business, Compete Against FinTechs
The ISG Provider Lens™ report reveals that traditional banks are increasingly competing with digital financial services amidst rising consumer expectations for digital solutions. The banking sector is experiencing profit growth due to higher savings and lower credit losses. Emerging technologies like AI, blockchain, and mobile banking are being adopted to modernize operations. The report highlights the challenge of digital transformation, emphasizing the need for banks to collaborate with tech service providers for success. Accenture, Cognizant, and Infosys are recognized as leaders in the sector.
- Traditional banks are experiencing profit growth due to increased consumer savings and narrowing credit losses.
- Banks are adopting emerging technologies like AI, blockchain, and mobile banking to enhance operations.
- Digital banking transformations require significant investments and can be complex, involving legacy systems and regulatory compliance issues.
ISG Provider Lens™ report sees traditional banks facing competition from digital financial services providers and increasing customer demand for digital services
The 2021 ISG Provider Lens™ Digital Banking Services Report for the
Banks are adoption emerging technologies such as mobile banking, artificial intelligence, blockchain, contactless payments, open banking and cloud computing to transform their front- and back-office operations, the report says.
“We’re confident that technology spending by the banking industry will continue in areas such as loans, wealth management, real-time payments and banking from anywhere,” said
The report sees a changing mindset from both banking customers and industry executives, with a shift from branch banking to anywhere banking. Branch networks are undergoing a drastic transformation, redesigned to reflect persona-based hyper-personalization. There is an immediate demand for front-end automation emphasizing enhanced user experience, with interactive bots taking center stage.
Digital banking transformations can take a long time and demand considerable investments, the report adds, and banks should consider future needs, scalability and agility when engaging with digital banking providers. Digital banking transformation is not as easy as switching off the old system and switching on the new system, the report says, and hurdles to core banking modernization also include the inherent legacy complexity associated with data migration and integration and regulatory compliance.
While platform vendors and the banks have a thorough knowledge of the functional aspects of the banking system, they often lack the underlying technology expertise to undertake the transformation, the report says. Banks tend to rely on an implementation partner’s ability to analyze existing systems and create a roadmap for the future state of the underlying system.
Service providers examined in the report have invested in several new capabilities, including a combination of functional and technical expertise, allowing them to customize components for banking customers, the report says.
Systems integrators are becoming well versed in needed technologies, giving them the edge in implementations, the report adds. In some cases, systems integrators partner with multiple core software providers, enabling them to gain experience in handling different systems. This allows them to serve in an advisory role, enabling smoother transformations for banks.
The 2021 ISG Provider Lens™ Digital Banking Services Report for the
The report names Accenture, Cognizant, Infosys, TCS and Wipro as Leaders in all four quadrants and Capgemini and HCL as Leaders in three quadrants.
In addition, LTI was named a Rising Star—a company with a “promising portfolio” and “high future potential” by ISG’s definition—in all four quadrants.
A customized version of the report is available from Infosys.
The 2021 ISG Provider Lens™ Digital Banking Services Report for the
About ISG Provider Lens™ Research
The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across
A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.
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