During the Great Financial Crisis, legacy banks turned their focus to cost and capitaloptimization to help drive profitability amid a backdrop of slowing revenue growth. New regulations and changing business practices meant that technology investmentwas diverted towards regulatory and compliance challenges. While this washappening, smaller ‘challenger banks’ began to emerge driven by FinTech startups.These challenger banks were designed around the digital revolution and were ableto leverage data insights via agile technology stacks. With these insights, theyoffered a customer personalization in their financial services and a fully digitalbanking experience.
As noted in the report that follows, legacy banks often have data that is stuck inmultiple silos supported by core banking technology that was literally built in the ageof black and white television. Manual intervention is high, which slows downoperating speed, reduces flexibility, increases costs, and ultimately degradesefficiency and experience. Because a lot of digital technology isn’t part of corebanking technology, challenger banks tend to be quicker at incorporating newproducts and processes onto their platforms and help to easily connect with thirdparty products — offering more choices to the end user.