Rapid changes in customer expectations, regulations, and intense competition from the growing fintech sector are pushing banks to constantly innovate.
To keep pace and not fall behind, banks are forced to reevaluate and redesign their operations, aiming for increased automation, cost-efficiency, and overall operational excellence.
Mendix – a low-code development platform, stands out as a key enabler in this context, facilitating the swift deployment of new digital products and features. In this article, we will explore how Mendix can assist banks in turning the challenges of today's financial landscape into opportunities for growth and technological progression, keeping them at the forefront of innovation.
Trends reshaping the banking industry
The way financial services are delivered and managed has rapidly evolved over the past few years. In this rapidly changing sector, several key trends are setting the pace. According to Forbes, challenger banks, with their agile and customer-centric models, are becoming increasingly popular, redefining the banking experience.
Simultaneously, the concept of inclusive finance is gaining momentum, turning into a crucible of innovation aimed at broadening financial access. Fintechs, not to be outdone, are making significant strides in sustainable finance, embracing the 'green wave'.
In response to these trends, traditional banks are intensifying their IT development to spearhead innovation. The Covid-19 pandemic has further underscored the importance of this shift, placing a heightened emphasis on product innovation and customer experience.
This paradigm shift sees IT improvement now eclipsing operational efficiency as the primary driver of digital acceleration. However, banks often find themselves grappling with the dual challenges of evolving technology strategies and resource constraints, which can hinder their ability to keep up with the transformation.
Key areas of banking innovation include implementing mobile and open banking as primary banking methods, utilizing big data analytics to enhance customer experiences, deploying artificial intelligence for personalized customer interactions, and adopting blockchain technology to ensure secure and transparent transactions.
Navigating the risks of banking innovation
While the push towards innovation in banking brings numerous opportunities, it also comes with its share of risks. Operationally, there's the danger of not meeting established quality, cost, or scheduling requirements, which can derail even the most promising projects.
Commercially, there's the risk of failing to attract a sufficient customer base, especially when new services or technologies don’t resonate with target audiences.
Financially, investing in innovation projects that don't yield the expected return can be a significant setback, draining resources that could have been allocated to more successful initiatives.
These risks underscore the importance of strategic planning, market understanding, and careful resource management in the pursuit of innovation.
Operational, commercial, and financial benefits of Mendix
Mendix adeptly addresses the majority of risks associated with banking innovation. Operationally, it encourages developers to find new ways to speed up the development process up to seven times and accelerates time to market, thanks to its proven technology, ease of integration, extensive list of features and possible use cases, ready-to-implement templates, and pre-existing workflows.
Commercially, Mendix fosters a sustainable and functional collaboration between business and IT, leading to solutions and products that are less abstract and more closely aligned with real-world requirements.
It allows developers to swiftly create new applications and features and deploy them fast whether on-premise or in the cloud.
This capability allowing for rapid idea validation is a crucial factor for staying competitive in a market with escalating competition and constrained budgets.
Financially, using the platform can translate into lowering the development costs. Its adjustable pricing structure makes it a cost-effective choice for banks, enabling them to invest in innovation with a controlled budget, limited resources, and reduced financial risk.
Mendix: a catalyst for digital acceleration in banking
Mendix has a great number of possible use cases in finance, but the most popular digital challenges that banks can address with the implementation of this low-code platform are digitization of customer experience, modernization of legacy core systems, and business process automation or optimization.
1. Digitizing customer experience with Mendix
Mendix revolutionizes customer experience in banking by offering versatile tools for creating consistent, future-proof touchpoints, from web and mobile platforms to IoT-enabled smart apps, wearables and immersive experiences. Utilizing low-code development and a unified tech stack, it integrates with existing systems, streamlining the development of impactful, customer-focused applications.
Mendix ensures uniform experiences across all channels, enables deployment to various clouds, and enhances design agility with its Atlas UI system. Additionally, AI-assisted bots and collaborative tools expedite the app development process, ensuring swift, efficient delivery of high-quality digital solutions.
The experience of Garanti BBVA Technology is a good example on how banks can digitize their customer experiences with Mendix. Previously relying on a mix of legacy systems and manual processes, the bank faced challenges in efficiently managing requests between internal departments.
By adopting Mendix in 2021, Garanti BBVA Technology was able to digitize over 200 internal workflow processes into a unified user interface named Corpus.
This move not only streamlined their operations but also modernized the user experience (UX), offering a standardized and user-friendly interface for employees working across various processes. Mendix enabled the rapid delivery of this new system, meeting the bank's high standards for enterprise-level workflows.
The transformation led to a centralized, efficient hub for internal requests, thereby enhancing the operational efficiency of the bank and setting a new benchmark in customer experience within the banking sector.
2. Revolutionizing legacy systems with Mendix
Modernizing legacy core systems is another critical aspect of digital acceleration in banking, and Mendix offers a solution for this challenge. Legacy systems like ERPs or core banking systems, while once cutting-edge, now struggle to keep up with the rapid advancements in technology.
These systems often have deep, custom modifications unique to each banking organization, making updates costly and complex. Mendix’s approach to this problem involves creating smaller, more manageable applications that can be integrated with these core systems. This strategy allows banks to maintain essential core features while simultaneously deploying modern solutions in a fraction of the time required for traditional high-code methods.
A case in point is NHG's experience. They needed to modernize their applications to enhance flexibility and establish a common shared data model to avoid duplication and data quality issues. Mendix enabled NHG to replace their legacy systems with smaller applications using microservices, maintaining the operational integrity of their core systems while modernizing their digital infrastructure.
This approach exemplifies how Mendix facilitates the modernization of legacy systems, allowing for a seamless transition to more advanced, efficient, and flexible technological solutions.
3. Optimizing business processes with Mendix
Another proven way to digitally accelerate and decrease operational costs, reduce human error, and increase process efficiency is to improve and optimize business process automation. The Business Development Bank of Canada (BDC) exemplifies this through its partnership with Mendix.
Originally established to make Canada the prime location for starting a business, BDC needed to modernize its core to support entrepreneurs effectively. Embracing Mendix's low-code platform, BDC transformed its approach to application development and customer service.
This shift not only improved and expanded BDC's products and services but also ingrained a culture of collaboration and agility within the organization. The bank's Core Lending Integrated Component System (CLICS) now comprises various applications, including CRM systems and client file systems, integrated with its Core Lending System, enhancing process efficiency.
The impact was profound: application development time was cut from 30 months to just eight, and loan processing times were significantly reduced, with some loans being disbursed on the same day. This transformation has resulted in a more engaged staff, streamlined product introduction, and a comprehensive, efficient service delivery to BDC's clients, demonstrating the powerful role of Mendix in facilitating business process automation and optimization.
In a time where digital acceleration has become essential rather than optional for the banking industry, Mendix stands out as a flexible and powerful partner. By building solutions based on its low-code platform, banks can navigate the complexities of operational, commercial, and financial challenges, gaining the agility and efficiency required in the modern financial landscape.
From digitizing customer experiences to modernizing legacy systems and optimizing business processes, Mendix offers a comprehensive toolkit for banks to stay ahead in a rapidly evolving market. Ultimately, the Mendix platform symbolizes a transformative force, enabling banks to not only meet but exceed the demands of innovation in the digital age. If you're looking for a Mendix partner to support your bank in digital acceleration with Mendix, we're here to help you.