Across the globe, IT vendors are developing new solutions to meet growing market demands in the financial sector. This demand is primarily fueled by the industry's need to offer innovative products and services to fulfill their customers' expectations. Accordingly, IT vendors are enlarging their own portfolio of products and services.

Some vendors with expertise in areas like core banking, private banking and treasury have started experimenting on digital platforms to develop applications for mobile and mobile devices in response to consumer demand. Their domain knowledge in banking and financial services goes a long way in helping them create the right digital applications. As these digital applications are generally peripheral to, and integrated with, the core banking system, a core banking vendor with adequate expertise can also venture into this space. In fact, since the core banking vendor is well aware of the inbuilt functionalities and features of the back end system, it knows the right touch points for integration, and how to provide integrated business functionality through the digital system.

A few core banking vendors have tasted success and have been able to expand and develop a digital portfolio, but others have fallen way behind. Overall, it was easy for these vendors to experiment and test the new solution within their captive market of existing customers who were also more receptive to a new solution from a trusted partner. That being said, this is not always the case, and vendors should be prepared for a stringent evaluation process. The feedback from existing customers must be treated as an important indicator of the standing of the new product.

Vendors must be aware that expertise in core banking solution development, while useful, is no guarantor of success in digital solution development. This requires:

a) Understanding the digital technology or platform

b) Understanding the market requirement

c) Understanding consumers, their tastes and preferences

d) A simple user interface and navigation

e) Ease of integration etc.

Though some of these apply to core banking as well, the digital solution should be sleeker and more consumer-connected compared to the former, whose primary users are bank staff. Strong knowledge of advanced digital technologies, innovative thinking to keep pace with changing demands, a customer friendly attitude, reliability and security are a must.

The vendor should also ensure that in developing new solutions, it does not compromise its core strength in core banking. Market leadership in core banking does not automatically translate into a warm reception in the digital space. Familiarity with technology and programming language does not matter as much as digital domain expertise and market awareness. The vendor will face tough competition from the many proven vendors of digital solutions.

To conclude, the core banking vendor should examine the pros and cons of developing a digital solution to ensure that it does not affect the development of core banking, where it already has an established presence. The vendor can hire market experts rather than depend on core banking developers in case of a shortage of resources. The vendor must invest in digital solution fully aware that it will not achieve the same success as before unless the solution has something different to offer. It can also look at acquiring established market players and develop their products rather than build from scratch. A multi-pronged business strategy should consider all relevant aspects before actual development. It might be ideal to have a separate set of domain and technical experts collaborate with the core banking software experts and developers. This will ensure the development of a suitable product which can address the requirements of the tech savvy end users .The digital solution strategy must accommodate the periodic change in market demands. Building a portfolio of solutions in the digital space is necessary for core banking solution providers, but even more necessary is a well-thought out market entry strategy.