Neobanks are set to benefit from these developments. But if neobanks can benefit, so too can incumbents. However, to do so, they must abandon their outdated methods, overcome their reluctance to change, and adapt their operations and their mindsets to customers’ changing needs and wants. Make digital the priority Wherever possible, incumbents need to emulate their younger, more agile rivals. They must prioritise digital - in particular mobile. Many incumbents currently spend their money in the wrong way, on large, multiyear IT projects that eventually lead to the launch of new services. But this approach takes too long and is too expensive. It’s a similar story with new apps and features. At the moment, a new app developed by an incumbent gets held up for at least a month in a staging area where Risk and Compliance will test and check it. That’s crazy. Accelerate time to market for new services The answer is to implement test-driven development. Here at Buckzy, wewant our developers to write code: submit it: and 30 minutes later it’s in production. We’ve automated black-box testing and UAT (user acceptance testing), to ensure that the new features and functions we introduce are secure and don’t interfere with existing systems. Time to market has to be the priority. At Buckzy, risk and compliance experts are part of our development teams and validate new code as it’s created, which accelerates the entire testing and resolution cycle and so reduces the time to market for new features and services. Importantly as well, incumbents should take on board the idea, “don’t make perfect the enemy of good”. By this we mean that rather than delay the launch of a new product or service because it’s not complete, banks should not be afraid to launch it anyway, but then be prepared to make small incremental changes, updates, and improvements on an ongoing basis. Fresh ideas and new approaches In their ongoing contest with neobanks, the principal challenge for incumbent banks is to be more open to fresh ideas and new approaches. These might initially seem costly with no guarantee of an immediate financial return. But their value is longer-term and lies in restoring trust, retaining existing customers – and even gaining new ones. Incumbents can ensure they stay trusted service providers to their customers by creating useful and worthwhile services that generate new incremental income, and which also define and drive the future direction of the wider industry. Abdul Naushad CEO Buckzy Payments “With these foundations in place - and sustained by a steady flow of private equity cash - neobanks are free to focus their time and effort on creating and launching easy-touse current accounts and other products that prioritise a topnotch customer experience.” Finance Monthly. F i nanc i a l Innov a t i on & F i nTech 63
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