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How the ecosystem approach can help FIs reimagine digital transformation

How the ecosystem approach can help FIs reimagine digital transformation

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The following is a guest post by Robin Smith, Regional VP, North America, Mambu.

As technology is reinventing digital experience in other verticals, such as social media, entertainment, commerce, and more, customers expect their banking experiences to provide the same experience and integrate into every part of their life.

Fintech advances, including emerging digital neobanks, embedded banking, artificial intelligence, and other tools, are expanding consumer options.

These advances have increased competition for FIs, but many struggles to be agile in incorporating these capabilities and transforming their customer experience due to their legacy technology.

Legacy has its limits

In the past, monolithic legacy tech architectures were the norm. Under legacy frameworks, FIs work with a single vendor to satisfy all their needs – whether with loan origination, account opening, or credit decisioning – which is incredibly difficult to manage.

For example, developers spend most of their time maintaining infrastructure and upgrading systems, only spending an estimated 32% of their time developing new software using standard APIs.

Legacy frameworks locked FIs into multi-year contracts with a single provider and limited the institution to the capabilities that the vendor provided.

This single-vendor model isn’t necessarily easier on a FI to manage: bank leaders spend significant portions of bank IT budgets on maintaining legacy systems, which limits the ability to invest in innovations and leads to backlog and burnout for developer teams.

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What is an ‘ecosystem approach?’

The one-size-fits-all model can no longer move fast enough to meet customer demands, develop new functionalities, and curate personalized customer experiences – and customers will switch institutions if they don’t have what they want.

Banks need (and have the opportunity) to address their legacy architectures and technical debt issues and embrace new digital capabilities through the “ecosystem approach,” a method that gradually decommissions an FI’s legacy technology. 

The ecosystem approach acts as an additional layer on top of the core, connected via APIs, enabling data extraction from external and internal systems.

Then, FIs can create a single dashboard that incorporates all the pertinent data into one place and can slowly rebuild or decommission the older technologies that no longer meet customer needs.

Instead of ripping out and rebuilding an institution’s entire technology stack, FIs can extend the core to add new services through this approach.

The ecosystem approach utilizes an open architecture to leverage niche fintech solutions that address emerging challenges, such as evolving credit decisioning policies and KYC, or adding new tools, such as artificial intelligence, to their digital banking platform.

Lead with innovation, not transformation

It is challenging for banks to transition to a new approach or add a new tool if their core is built on legacy architecture.

Adding novel customer capabilities can be resource intensive, time-consuming, and technically demanding of the institution’s technology team.

However, banks don’t need to completely re-architect their tech stack overnight; instead, they can build an ecosystem layer on top of the legacy framework to begin a gradual transition by adding new fintech tools.


This approach allows institutions to meet customer demands, integrate with third-party providers of fintech and related services and enable FIs to pick and choose the solutions they need.

Components such as wire transfer, KYC, decisioning, reporting, and payment processing are easily integrated into a bank’s framework, making choosing the services your customers want without the headache of removing and rebuilding a core.

Data access

Another benefit of this ecosystem approach is access to data. Data access is essential for FIs as it allows for better insights into customer decisions and enables the FI to offer the right products for customer needs.

Also, this personalization is something that customers expect, but only about 44% of banks are delivering personalized support, according to a report by JD Power. 

The ecosystem layer can pull data from the appropriate systems to enable better personalization and improved customer experience.

On the customer side, customers can see and interact with all their financial data without switching between platforms or migrating their data to a new platform.

On the bank’s side, they can use real-time data to offer personalized products and deliver meaningful insights to their users.

The ecosystem of innovation

Legacy frameworks across the financial services industry hold FIs back in creating end-to-end digital experiences, agile business capabilities, and improved efficiency.

According to a recent report by Accenture, companies are deciding to reinvent their enterprises by transforming their businesses with technology, automation, and AI.

Additionally, resource constraints and economic uncertainty are pressuring banks to find creative ways to add new, cost-efficient tools to their tech stack that deliver a personal experience, something customers desire in tough economic times.

Banks must prepare for this next wave of innovation and develop a digital advantage over competitors. This includes building a digital ecosystem of innovation.

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