With the continuous evolution of the technology landscape, banks are on a constant digital transformation journey to improve their customers’ experience and financial performance. Along with the growing number of IT providers, banks now have a large pool of solutions to choose from. While incumbent players provide established and well-known core banking technology, there is a myriad of ambitious startups utilizing emerging solutions such as low-code, blockchain, AI an others. There is often a dilemma the banks face on what is the right way to get a flexible and future-proof solution.
In this article, we explain the process and key criteria to pay attention to when choosing a digital banking software platform. By following these steps, you can select the right vendor that provides a modern and reliable solution for your needs.
Definition of the requirements. This stage will help you narrow down your search to the most relevant vendors that offer solutions that meet your specific needs. Not all requirements are equally important, some are more critical and need to be prioritized individually.
The top 7 requirements are:
- Functionality: The software should have all the features and functionality required to meet your bank’s specific needs. Implementations can be provided in-house and via partners, locally or globally. The vendor must have APIs that are simple to work with. It also should give you easy-to-use APIs that let you add the technology to your existing systems.
- Scalability: The software should be able to scale as your bank grows. You should ensure that the vendor can handle the volume of transactions your bank processes (and is going to process in some years) and provide solutions for expanding your operations.
Security: The software should have robust security features that protect your bank’s data and transactions. The vendor should provide regular security updates and be compliant with industry standards and regulations.
Support: The vendor should provide excellent customer support, including training, documentation, and technical assistance.
Speed-to-market. The faster you can get your product to market, the better your chances of beating your competitors, and the earlier you start generating revenue and realizing the benefits of investments. The ability to respond quickly to changes in the market or customer needs is critical in today’s business environment.
Costs. You should consider the cost of implementation, licensing, maintenance, and support when evaluating the software’s overall cost. The vendor should offer a pricing model that fits your budget and provides value for money.
Reputation: The vendor’s reputation is an important consideration when choosing a banking software vendor. You should research the vendor’s history, partners’ and customers’ references, and industry recognition to ensure that they have a good reputation.
The most important criteria banks will consider when choosing a software vendor in 2023, according to Velmie Fintech Market research 2023, are costs, innovations, a vendor’s reputation and the ability to deliver fully compliant, secure and reliable software solutions
- RFP process. The Request for Proposal (RFP) process is a common way for businesses to evaluate potential vendors and select the best provider for their needs.
A key factor when managing the RFP process is to ensure that all your prepared information is provided to all vendors to allow for a transparent and objective selection process. The project scope and requirements should be clearly defined in the RFP document. The RFP document should be sent to the selected vendors, outlining the project scope, requirements, and evaluation criteria. The vendors should be given a deadline to respond.
- Research and evaluation. Evaluate each vendor on the prioritized requirements. Use vendor scorecards to compare different vendors objectively. Check use cases, customers’ and partners’ references, and RFP requests.
- Demos. Schedule demos with relevant vendors and ask them to provide a detailed walkthrough of their software’s features and how it can be customized to your bank’s requirements.
- Contracts evaluation. Evaluate vendor contracts carefully to ensure that they provide the level of support, maintenance, and licensing that you require. Review pricing, renewal terms, and exit clauses to avoid any surprises later.
- Decision-making stage. After all of the stages above you should be in a good position to make a decision about which software vendor to work with. Be sure to carefully weigh all of the pros and cons before making your final choice, and don’t be afraid to ask for additional information or clarification if you need it. Negotiate the contract, finalize pricing and licensing terms, and sign the agreement.
In conclusion, choosing a banking software vendor is a critical decision that requires careful consideration. By evaluating vendors based on their functionality, integration capabilities, security, support, scalability, cost, and reputation, you can select a vendor that meets your bank’s needs and provides a reliable and robust solution for managing your operations.
In the end, it is all about the relationship. Clear communication and trust on both sides are what make a difference in the relationship between the bank and the solution provider.