There is a downside to agility. The ability to quickly develop and implement new digital banking technologies has become a necessary — even vital — characteristic for financial institutions to remain competitive. But institutions that throw off the constraints of legacy technology by assembling their own “open” platform from multiple fintech providers can be putting their future at serious risk if they lack the right talent and business plan, warns Doug Brown, SVP and head of Digital Banking for NCR.
The exec, who ran digital and mobile for FIS and helped launch mobile banking for Bank of America, is a big proponent of banks and credit unions making use of open technology platforms, enhanced developer tools and APIs (application programming interfaces) that provide the flexibility to partner with fintechs and even to design their own applications.
There is a one big responsibility, however, that comes with that kind of flexibility: The assembled system must integrate fully with the institution’s core system, ensure security, and be easily upgradable.
“Some institutions pursue a path that we call, ‘roll their own,’ or custom build,” Brown tells The Financial Brand. “They typically go out into the fintech ecosystem and negotiate with a group of players that are brought together to create a banking infrastructure.” Some institutions can pull that off. But for many that might be attracted to this free-wheeling approach, the danger, says Brown, is that such models can “fail really hard after a stretch.”
One reason is that when an institution chooses go down “a raw technology track,” as Brown puts it, they can become “too open.” That can leave them vulnerable on security issues, forcing them to go back and rearchitect the system, a costly exercise.
The risk of being too open with technology, a seldom-heard caution in the bank technology space, was one of several insights Brown offered in a lengthy interview.
‘I’ve Never Seen Anything Like It’
As a bank technology vendor, NCR saw firsthand the incredible surge of digital transactions across the banking system, particularly in mid April, during the height of the national stay-at-home period. “I’ve been in the digital banking business a long time and I’ve never seen anything like it,” says Brown.
Looking at peak digital banking traffic during the week of April 13-17 the vendor saw an increase of 260% to 320% over prior peak activity. “I still can’t get my head around this demand surge coming in real time because people were so desperate to get information,” Brown states. “We saw mobile check deposit increase 70% at a number of institutions on a daily basis because of branch closures and people’s fear of using an ATM to drop off a check.” Mobile banking…