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Despite continued political and economic uncertainty, interest rates on savings products are starting to rise as competition intensifies between established banks, building societies and challenger banks, writes Dave Patel.

This article was published in Mortgage Finance Gazette magazine’s September 2019 edition.

While consumers are the end recipients that benefit from technological advances, it is the financial institutions that are at the forefront of utilising new systems. Those firms that best implement new technology can maintain existing capabilities and develop stronger relationships in the market, and gain competitive advantage. This is certainly the case in retail banking, where technology is providing automated application processes that can benefit the provider as much as the consumer.

Historically, lenders have employed bespoke origination and servicing solutions. These systems invariably include a separate front end and core, which eradicates many of the advantages gained by employing a straight through processing solution. Multiple systems can often lead to project delays and subsequently, expanding costs. This is also true of bespoke systems when poorly defined or changing requirements lead to functionality issues and longer implementation timescales. Due to the nature of this model there are ongoing costs associated with any system updates, since multiple changes need to be made across separate systems. Together, these factors mean that the cost of originating a customer climbs and any potential return on investment is diminished.

Instead of this bespoke design, providers are turning to more all-encompassing digital propositions. Providing core components that remain constant across all platforms they offer providers cost effective practical solutions that can be quickly enabled. From the outset, these fully integrated systems offer greater flexibility alongside ongoing support and maintenance, saving both time and money when regulatory or product-led distribution updates are necessary. This is a key point given today’s fast-moving, innovation-driven market as genuine digital transformation can ensure that product changes or launches reach customers in a more timely manner.

Taking this form of digital approach will bring benefits for financial institutions at all levels. Providers can improve levels of productivity, efficiency and accuracy as well as speeding up drawn-out processes, at the same time reducing overheads, maximising margins and enhancing their overall appeal to customers. The time saved on consumer account origination and servicing can be better spent on improving the standard of relationship banking.

Investment will be required by firms that want to compete and grow in the future. Equally, the gains that can be made prove that this spend on technology is worthwhile. Striking the right balance between technology and the human touch allows providers to meet customer needs faster and more accurately.

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