UK banks are increasing their adoption of digital platforms as businesses and their customers move towards a cashless society, claims a report published today.
The document, published by Information Services Group (ISG) highlights the growing popularity of cloud-based core banking systems and instant payment technologies, along with automated anti-money laundering services and API-led applications.
COVID-19 has been responsible for accelerating the growth in digital platforms with a huge increase in public demand for using cashless transactions and contactless payment methods.
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However, the UK’s exit from Europe has exacerbated the need for transition. ISG’s report underlines that banks in the UK will be required to decouple their networks, including payment and so-called know-your-customer systems from the EU.
Therefore, in order for UK-based banks to retain a competitive edge in Europe they will subsequently have to invest in new technology and adopt more dynamic business practices. Many banks are channeling cash saved from the closure of bricks and mortar branches across the country into growing their digital platforms.
UK banks are now up against more competition than ever from fintechs and challenger banks, which operate leaner business models. As a result, conventional UK banks are being forced to offer a more diverse selection of products, including treasury management, supply chain and credit products.
However, fintech companies and the more adaptable challenger banks have a head start and already offer a wide range of digital options, including virtual payment cards, instant payment options and loyalty-based credit.
The report also highlights how UK banks are realizing that to stay competitive they’ll need to modernize their core banking systems. UK financial institutions are looking at artificial intelligence and other cutting-edge technology options to counter the threat from fintechs. Meanwhile, some are even joining forces with the competition.
“The pandemic has fast-tracked the move in the UK toward online transactions,” said Bryn Barlow, ISG partner based in the UK and co-leader of the firm’s EMEA BFSI industry practice. “Banks are looking for better coordination between their own platforms and their customers’ digital information and records.”
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