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Why European financial institutions need modernization to meet customer demands

Subramaniam Ramachandran
Director, Payments Practice - EMEA, Volante Technologies

In recent years, digital transformation has become one of the biggest challenges and opportunities for financial institutions of all sizes and disciplines across Europe. Whether it relates to integrating real-time payments or introducing innovative financial tracking and budgeting applications, this indiscriminate need to modernize services for the digital age only continues to become more urgent.

For one thing, the accelerated push toward modernization in Europe has become just as much about meeting the demands of local consumers as it is about keeping pace with financial services innovations emerging from other regions. Rapid advancements in financial technology and the subsequent rise of FinTech providers have led to a dramatic transformation of the competitive landscape, in which consumers’ preferences are increasingly shaped by a desire for the latest and greatest in digital banking applications and capabilities. And more specifically, since the start of the pandemic, digital banking users have increased by 23% in Europe – so whether by desire or necessity, the demand for digital banking services is on the rise.

But whether it’s a traditional bank or customer-funded building society, European financial institutions share the same primary challenge when it comes to addressing the evolving needs of today’s consumer. That is, undergoing the process of replacing outdated legacy infrastructure with modern, future-proofed systems.

Fortunately, while banks remain aware of the inherent complexity involved in addressing this challenge, they also seem to be realizing that a costly, time-consuming overhaul of their entire operations may not only be unfeasible but perhaps not even conducive to their survival. Given that competition emerging from the FinTech sector continues to heat up at an alarming rate, more and more European institutions are seeking the kind of flexibility and agility that can be most readily obtained through a more prescriptive utilization of cloud and API-based solutions.

After all, flexibility is exactly what financial institutions need to meet the constantly shifting demands of their customers and to do so within the unique parameters of their operations. Rather than rushing to digitalize every aspect of their business and retroactively tailor services to meet demand, working with a trusted and experienced third-party or Payments-as-a-Service (PaaS) provider allows institutions to adapt to their customers’ needs today, while proactively treating their infrastructure to achieve and sustain that much-needed sense of agility into the future.

Although remaining agile is undoubtedly a critical advantage, leveraging APIs in a cloud-based environment offers financial institutions several additional benefits, from cost savings to enhanced security and fraud protection features. These have both become increasingly crucial in light of evolving cyber threats and ongoing economic uncertainty in Europe and beyond.

Regardless of the individual approach taken, there’s simply no avoiding the shifting tides of consumer preferences in today’s highly digitalized environment, and financial institutions in Europe would be better at addressing their modernization needs sooner rather than later. And while the path to digital transformation is rarely without its speed bumps, those that choose the route of cost-effective, agile, and scalable solutions may find that the destination isn’t nearly as far off as it may seem.

Ready to improve your payments modernization strategy? Schedule a meeting with one of our payments experts.

Subramaniam Ramachandran
Subramaniam Ramachandran
Director, Payments Practice - EMEA, Volante Technologies

Subramaniam is a Payments and Cash Management professional with 20+ years of experience in a Tier 1 Global Bank, and currently works in the payments and integration domain.


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