Financial institutions are not necessarily known for being agile and adapting quickly. However, in 2021 it is becoming increasingly obvious that financial institutions need to evaluate how they interface with their customers, what role they play in their customer’s journey, and how to stay relevant in and incredibly complex environment. While the reality of social distancing, mask wearing and COVID-19 continue to challenge all financial institutions, those issues are not the only ones facing them. In 2021 these organizations are looking at an evolving regulatory environment, continued historic low interest rates, loan impairments and cybersecurity threats. Financial companies are seeking ways to handle all of these situations simultaneously – which seems a potentially impossible task.
As if that weren’t enough, technology advancement has not slowed down. Can those same institutions respond to all that is happening externally with old, legacy equipment? Clients increasingly expect digitally smart apps and interfaces, so keeping pace with technology growth is also important. But perhaps, experts say, all of the above can be addressed with a change of mind – that is, a willingness to take a hard look at the business model with an eye towards more flexible organizational operations and structures. If COVID taught us anything, it is that companies across all industries need to be able to act more proactively in the face of unexpected events and challenges, while still keeping costs within budget.
No Bank is an Island
Traditionally, financial institutions owned all of their own hardware and run all operations in-house, but many are re-assessing the sustainability of this practice. Financial realities are morphing and changing all around these institutions while digital banks are taking market share. This has motivated historically strong banking and financial companies to quickly reevaluate their function in the overall landscape, and how they need to innovate to best serve, interact and engage with clients.
To proactively confront these challenges, financial institutions are turning to technology vendors to support them through the evolution. What services are worthy of retaining? What skills can they source inhouse, and which do they need to outsource? The answers to these questions and more may lie in the managed service model. With managed services, banks have a viable route to efficiency and innovation; one that also lines up with their cloud and digital framework.
Benefits of Managed Services
Managed services can provide financial institutions with several advantageous benefits:
Rapid innovation: If a managed service provider assumes the bank’s operational and technology workload, in-house IT departments can focus their efforts into programs focused on innovation, key priorities and bringing relevant products to market. This levels the playing field with digital banks.
Ongoing Improvement: Cyclical upgrades and releases suck up massive amounts of human and financial resource as banks battle to keep systems and products up to date. A managed services firm can guarantee keeping the company operating with the latest software versions, hardware upgrades, and security fixes.
Streamlined operations: In the conventional business model, financial institutions are required to manage multiple vendor relationships and assume responsibility that all products and projects are in sync. This complex environment has a significant impact on expense and resources. With a managed service model, one vendor can become the point of contact to handle all of the needed services and operations, granting banks greater efficiency and ease of ongoing operations.
Lastly, managed service models guarantee that expenditures are manageable and predictable, allowing for optimized service on budget. In 2021, established financial organizations are facing down new levels of complexity, and managed services companies provide a way to compete in a challenging market, giving the agility and responsiveness of their digital competition.
For more information, call Alliance IT.
