Building the next-generation financial institution

Building the next generation financial institution blog

Technology, yes; but the customer experience above all

Over the last decade, technology adoption and consumer behavior changes have reimagined how people bank and pay, and the pace of change continues to accelerate. Fintech partnerships, open banking, new digital tools and oceans of data are opening new opportunities and challenges for institutions.

What are the characteristics of a financial institution built to succeed in an environment of ever-rising expectations? At Forum 2023, Fiserv experts shared their vision for the next-generation financial institution: Whitney Stewart Russell, head of Digital and Integrated Solutions; Dudley White, head of Core Account Processing Solutions; and David McIninch, head of Next-Gen Solutions. In a wide-ranging discussion, they highlighted developments in data insights, core banking innovation and digital experiences that are driving the future of banking.

This panel session was edited for length and clarity.

What is the fastest-moving trend in the modern financial institution?

White: Data is going through the most explosive innovation today. You’re aggregating banking or credit union data with information from curated relationships you have with fintechs through a third-party app. That new data requires a robust business intelligence capability that provides predictive data analytics. The data piece is incredibly huge for the future of financial institutions.

McIninch: Institutions will need to become more aggressive at weaponizing data, viewing the data generated by these third-party relationships as an object that can be shared and leveraged to do unique things. It’s about having a clear strategy from both a product point of view and what will drive the best customer experience.

How do community and regional banks position themselves to become next-generation financial institutions?

Russell: It has a lot do with leveraging digital to reinforce your brand. The digital channel is a way to put your toe in the water as a next-generation bank. Maybe you aren’t ready to go full throttle for a whole new market or business strategy. But boy, you could test in your digital channels and really see what works for you and your customers.

White: As you consider digital transformation, don’t lose sight of the traditional, interpersonal, high-touch aspect of the brick-and-mortar branch. It’s not a case of either/or; the modern bank has to do both.

Russell: And it has to be seamless. You need ready access to the data from interactions customers or members have had in your digital channels and with team members in your locations, and to bring that together in a way that’s really informed and advisory. That’s how you grow relationships and primacy in those relationships. 

Whitney Stewart Russell suggests testing in digital channels to see what works for you.

With all the technology changes that are coming, is core conversion a necessity?

McIninch: From my point of view, that’s the last question you ask, after a series of other questions about what you’re trying to accomplish.

If your growth strategy involves large-scale acquisition, you’ll need to determine whether your core can support a larger institution. On the other hand, if your strategy is to aggregate deposits and build relationships with small businesses, that may not have anything to do with core conversion at all, but with having the componentized services that create the best customer journeys for those users.

Core conversion is both a mindset and a technology decision. If the culture and mindset of your institution is agile and innovative, you can have a more robust discussion about digital strategy, and less about needing to switch cores.

White: Also, today there is a blurring of what is “core.” The thought of a dual-core environment really changes the paradigm. The focus now is not on conversion, but rather coexistence. You can have the DNA platform and Finxact, for example, working side by side to leverage innovation and the digital experience, while maintaining your existing core. 

Dudley White explains the importance of data to the future of banking.

Russell: Still, client experience is king. Core evolution, digital investment and technology investment in general should only be an enabler for creating an awesome client experience.

The customer experience challenge for many community banks relates to the piecemeal architecture they’ve built over time. How is Fiserv addressing that?

White: In the future, you’ll find it a lot easier to integrate cores with whatever best-of-breed surround solutions you want. We’re committed not only to integrating our cores with our internal solutions, but to creating a flexible architecture to enable curated relationships with fintechs as well.

Russell: We also know this has to be an open solution. We’ll make it open and plug-and-play, enabling fintechs to come in and build to our collective UI standards. Everything will look more like a single integrated solution, and I think it will also enable us to be nimbler and more creative.

How will AI and large language models play into this technological framework?

McIninch: They’re going to be foundational. We want software to do more work than people do. I think it’s inevitable that Fiserv will be serving up an enormous amount of data on behalf of our clients into things like generative AI or large language models, to create better decision support. It will run across every aspect of daily business.

David McIninch says core conversion depends on your growth strategy.

Do you see a future where banking customers put on their Apple Vision Pro goggles and talk to an avatar to do their banking?

Russell: We actually did this about three years ago with a credit union – we simulated a branch in the metaverse. It was not great. I think there are more basic digital functionalities we could do so much more with. The real challenge is to meet customers where they are and deliver a great experience that makes them want to grow their relationship with you and get things done. Then they can go and do fun stuff with their virtual reality goggles.

What does banking look like five years from now?

McIninch: The usual banking challenges and customer needs will still exist. But the financial institution of tomorrow will use large language models, AI and more to serve these needs and anticipate others that customers may not even know they have.

White: Moving from data to predictive insights that are actionable will be the big change. That kind of data will not only help with transactions and understanding your customer, but also with combatting fraud.

Russell: I think we’re going to be in a much different place in terms of how we use data to anticipate customer needs. The work going on now at Fiserv around open data is a brave new frontier that will change the game and enable our clients to create awesome experiences for their customers and members.