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Strength in Numbers

The famous basketball player, Michael Jordan once said: "Talent wins games, but teamwork and intelligence win championships." In team sports, collaboration and teamwork play a deciding role in success or failure. When it comes to banking, however, it seems to be that collaboration will be its downfall.

Retail banks compete against one another on innovation that drives banking modernisation and heavily protect their intellectual property. But the fact is banks can’t compete on savings accounts for example, only on how they price their models and the experience they provide their customer.  

Collaboration, the industry’s best-kept secret 

Despite this, many banks believe the secret to success is keeping all innovation behind closed doors. In the future, where the only constant factors are open banking regulation and the importance of the customer’s experience, the industry must change its approach to modernisation.

Splashing out on a star player doesn’t always work out 

Updating banking technology is a costly outlay. Just last year, for example, Deutsche Bank, announced plans to invest €13bn in overhauling its technology platforms between 2019 and 2022. Small banks, on the other hand, have next to much less capital to spend on developing new services to fund the cost of maintaining existing IT systems and dealing with increasing operational expenses. 

For large banks, the majority of modernisation capital goes towards obvious areas such as R&D into disruptive services, as well as hiring staff with the skills capable of building them. It also goes into not-so-obvious aspects, like making sure new services are compliant with regulations and standards and launching them once developed. Product development and implementation can often take years, by which time the innovation cycle is likely to have moved on.

Additionally, innovation for the entire industry comes with huge cost and risk implications, even for the more established players. But when doing nothing is not an option, how can banks on both sides of the spectrum ensure they remain innovative and relevant?

Opening up the doors 

This is where collaboration shines bright. Partnering with the right organisations can help banks remove many of the risks associated with modernisation. It will also ease the process with developing solutions which will help them to adhere to the latest regulation and improve customer experience.

The Banking Industry Architecture Network (BIAN) has been working for over a decade to develop a common standard for banking innovation. More recently this has resulted in the development of a coreless banking initiative. This initiative aims to promote a more efficient and effective approach to modernising banking software. The collaborative effort between initiative partners will make it easier for banks to source and adopt new business services. This means banks can react to the limitations of changing customer expectations rapidly, and with much less cost than having to develop the services from scratch.

Power in numbers

Many of the biggest banks may question this collaborative approach in fear of losing their collaborative streak. The weight, however, of carrying legacy systems to the next level is becoming increasingly heavier, and the need to seek an extra pair of hands has grown more urgent. To thrive and overcome many of the barriers involved with developing a bank of the future, banks must look beyond their own four walls and look to collaborate with others. Whether this is a fintech, other banks or even technology companies. The future is bright if we work together. 


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Hans Tesselaar

Hans Tesselaar

Executive Director


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03 Nov 2011



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