Progressive Modernization of Technology Key for Regional Bank Success
A post at Forbes describes an environment where regional banks in the US face growing digital disruption and "macro headwinds" -- and describes how embracing technological change is crucial for their revival. The author, Forbes Councils Member Rodrigo Silva, goes on to note that this transformation must prioritize fraud prevention to protect both the banks and their customers.
Digital disruption has made it easy for customers to switch banks and unbundle their banking relationships, creating competition for each product in a customer's wallet.
This increased competition from fintechs, tech firms, and mega-banks has put significant pressure on regional banks. To stay competitive, they must modernize their core systems and digital capabilities.
Technology at the Forefront
As we've noted in this space many times previously, embracing a "progressive modernization" approach will allow regional banks to gradually update their systems while retaining existing functionality.
Mr. Silva notes:
With the right approach to technology, regional banks have the potential to innovate their way to competitiveness and higher profits. Real-time payments, embedded finance services, hyper-personalized customer experiences, and automation of once-costly back-office functions are some of the features on this path to growth.
This is an approach that many banks -- from the largest FIs to smaller community banks and credit unions -- have taken for check processing automation. The integration of AI technologies have enabled banks of all sizes to achieve straight-through processing -- achieving over 99% read rates and accuracy.
Furthermore, with the industry adopting an open banking approach, smaller financial institutions are able to leverage these technologies through their core providers or items processors. This is how regional banks are able to "thrive and continue to play a crucial role in the financial landscape."