| | AUGUST 202119CIOReviewThe need to embrace digital innovation has never been more important for the financial services industry. Jamie Dimon, CEO of JPM Chase, once noted thathe believes banks are becoming technology companies.More recently, in April of this year, he commented in his letter to shareholders:"And they (banks) are facing extensive competition from Silicon Valley, both in the form of FinTech's and Big Tech companies (Amazon, Apple, Facebook, Google and now Walmart), that is here to stay. As the importance of cloud, AI and digital platforms grows, this competition will become even more formidable. As a result, banks are playing an increasingly smaller role in the financial system."When it comes to the megabanks, one solution to these competitive challenges is to invest in bolstering their own technology as well as acquiring smaller technology companies through M&A (which is the trend they are all following). It is vital that financial institutions continually evaluate how best to adopt technology and reposition themselves in the evolving digital landscape. BY CONTRAST, WHAT SHOULD THE SMALLER BANKS, CREDIT UNIONS AND FINANCIAL INSTITUTIONS DO TO STAY COMPETITIVE?Smaller institutions cannot operate at the same level as the largest institutions; however, we needto integrate with emerging technologies through strategic partnerships. Smaller financial institutions must rely on a combination of software providers for banking services, and technology partnerships. This balance of software providers is more critical than ever to maintain efficiency and to stay competitive. A continued evaluation of the costs and benefits of these alliances must now become part of standard operating procedure.Consequently, FI's and software companies must also embrace open API's. Software should be more flexible and compatible with a multitude of technology stacks. Security concerns prevented most banking software platforms from integrating API's in the past, and many software companies had been slow to adopt this practice. However, now that secure connections and cloud solutions are becoming more mainstream, the tide is turning. Regarding this change, according to Backbase, a digital banking technology company, "Despite their initial reluctance towards open APIs, banks are starting to understand their potential, with almost 70% implementing API gateways to accelerate digital banking innovation. 41% see an API gateway as an enabler, while almost 38% see it as a chance to open up to third parties."The Covid-19 pandemic has made it apparent that investment in technology and specifically digital transformation is extremely valuable. These innovations allowed financial institutions to remain operational while much of the world was shut down. Where its customers were more accustomed to using digital platforms such as Mobile Banking, Online Banking, and Mobile apps, a financial institution fared well during the pandemic.For almost 20 years, I have been involved in program management and software development and have implemented digital change firsthand. When I joined OceanFirst Bank, right before the height of the pandemic, it was immediately clear to me that our leadership understood the significance of digital transformation and were actively embracing this across the organization. A program that had previously been launched By James Goodstein, VP Product Manager, Digital Banking, Ocean First BankRIDING THE WAVE OF DIGITAL TRANSFORMATION: HOW CAN SMALLER FI'S COMPETE?CXO INSIGHTS James Goodstein
< Page 9 | Page 11 >