As retail banking undergoes an epochal shift, TietoEVRY’s Hans Sjölund considers the implications for the card business, and why issuers need to transform their infrastructure to ensure profitable growth.
Retail banking – from branch to digital
Many of us might remember a retail bank branch from 20 or even 30 years ago: a reassuringly traditional institution with strict opening times, lines of customers waiting to speak to advisors or tellers and, in the background somewhere, a huge steel door leading to the vault where the money was kept.
Fast forward two decades, and banking is digital. Almost three-quarters of Europeans now bank online, and 66% shop online at least part of the time, according to research from PCM.
PCM’s research details how branch banking has declined by half over the last 20 years, with further declines predicted to 2030.
In other words, we’re in the middle of a shift to fully digital banking – which means transactions are faster, shopping is done via a laptop or mobile device, and security concerns shift front and centre as fraud migrates to the digital channel.
It also means customers now expect very high levels of service, including the instant delivery of innovative, digital-first approaches.
Time to change platform
In our new white paper, we explain why and how the card business has to reinvent itself to keep pace with this once-in-a-lifetime change. At a time when retail banks are under intense pressure to improve margins and rationalise their services, the profitability of card programmes is declining as issuers grapple with complex legacy technologies and rising costs in several areas.
Our research in the UK and Nordics shows consumers continue to see contactless cards as their go-to payment method – but this means issuers must take decisive steps to ensure their card platforms are fit for tomorrow’s digital-first economy.
Most issuers employ a wide range of card management software platforms, each built to serve different systems, business units or geographies. Using multiple card platforms is inefficient and time-consuming when it comes to rolling out new services or responding to the growing range of regulatory requirements our industry faces.
What’s more, it also increases operational risk as each platform requires individual attention to maintain regulatory compliance and interoperability. The risk of system failure also grows as these platforms become older and more vulnerable.
The answer to these complexities is to rationalise the many card platforms issuers use into one integrated solution. In doing so, banks will cut the cost of issuing cards and control fluctuations in revenue from card issuing as all activity passes through one fully integrated platform.
They can also reduce the amount of time and money spent maintaining regulatory compliance across multiple platforms, while introducing new technologies such as instant card issuing and mobile optimisation gets easier. Products are delivered to market more rapidly, compliance is simplified and the up-front investment in developing a new card platform is reduced.
The best route to rationalisation
To date, digitisation has taken traditional banks too long and has been partial at best. Rationalising card platforms makes sense as part of a wider change to fully digital banking; it also helps free up capital and resources for innovation in other areas. As banks rush headlong to “go digital”, they should not ignore the fundamental changes needed in their existing business.
Our new white paper explains why the optimal means of rationalising card platforms is to embed a proven solution modified to suit a bank’s individual needs using Software as a Service (SaaS) as the delivery model. By taking the SaaS option, banks can improve their speed to market and adapt rapidly to changing regulatory demands.
Traditional retail banks are currently facing an existential threat from “digital-only” banks, which are predicted to treble in size by 2030.
Given such intense competition, a piecemeal approach to digitisation is not a winning strategy. Banks must rationalise their card platforms to optimise operational efficiency and service delivery.
By outsourcing tasks such as platform updates and compliance requirements to an expert third-party partner they can trust, banks will be free to create and deliver innovative products that enhance their customers’ experience and improve loyalty.
To download a copy of “The race to digital: why banks must rationalise card platforms”, click HERE.
 See the Digital and Card Payments Yearbooks 2020-2021 at www.paymentyearbooks.com
 See: https://www.tietoevry.com/en/newsroom/all-news-and-releases/press-releases/2021/03/time-for-biometric-security-on-contactless-cards-new-research-from-tietoevry-reveals-uk-consumers-contactless-concerns/
 See UK Tech News, 12 July 2021: “Traditional banks could be reduced to storage vaults”: https://uktechnews.co.uk/2021/07/12/traditional-banks-will-be-reduced-to-storage-vaults-by-2030-unless-they-move-away-from-a-one-size-fits-nobody-digital-approach-quadient-warns/
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