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Exploring Next Generation Digital Banking Platforms

The banking industry is being disrupted by new agile, digital-savvy competition. Traditional banks must now increase their efficiency and reduce costs, all while preparing to delivering next-generation digital services, according to the latest worldwide market study by Gartner.

Gartner predicts that by the end of 2019, about 25 percent of retail banks will use innovative startup providers to replace legacy online and mobile banking systems. These digital transformation vendors are emerging to make banking easier to accomplish on the various devices that today's customers want to use.

"Startups and emerging providers of digital banking platforms offer banks interesting opportunities for innovation," said Stessa Cohen, research director at Gartner. "However, CIOs must prepare to manage the challenges of evaluating and selecting new vendors that may not have proven track records in the financial services vertical or may simply be new and untried without an extensive customer base."

Digital Banking Market Development

Gartner advises bank CIOs to work with business leaders and other key stakeholders to assess the bank's comfort with, and ability to manage, the risks associated with using new providers, especially financial technology startups.

One of the most important reasons why the market for digital banking solutions has evolved is because most legacy vendors that offer software applications have been slow to react to demands of progressive digital banking services.

Incumbent vendors often don't support open architectures that decouple the presentation of services from the banking services and transactions -- that handicaps the bank, by making it very difficult to offer innovative digital services.

As a result of the forward-looking requirements, new vendors have emerged with digital banking capabilities that enable bank business and IT staff to offer software applications that support personalized, customer-centric banking experiences.

Open Unified Digital Banking Platforms

New solutions make it possible to deliver digital products and services, and create a multi-dimensional customer experience across all devices and channels. They enables the bank to develop and deliver online services for use by both bank staff and customers, via any device or channel.

According to the Gartner assessment, digital banking platforms may include a broad range of capabilities including financial management, payments, marketing, loyalty, analytics and customer communication management.

Gartner views open unified digital banking platforms as an emerging technology, even though some of the solutions on the market -- including some from niche banking system vendors -- have been available for several years.

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