For traditional banks to rise above the competition they face from big tech, neobanks, and fintech, they need to add new digital skills to their traditional banking capabilities; positioning themselves as agile providers of financial services by providing demand-driven services at the right time and place.
Traditional banks will face several challenges to successfully compete against newcomers to the financial services sector. Cryptography will play a vital role in meeting the challenges they face instead of being a bottleneck holding them back.
#1. Focus on customers’ unmet needs
Banks will need to focus more on their customers’ unmet needs, which can be solved by developing and deploying innovative digital solutions. In addition, they will need to be able to interact with clients personally and on a broader scale without the risk of personal or financial information being compromised.
#2. Scale in terms of number of customers
New digital banking platforms need to be scalable as the number of customers grows. This will prevent problems caused by limited service availability or security concerns as additional consumers join the organization.
#3. Open, scalable platforms
Existing banks will need open, scalable digital platforms enriched through partnerships with third parties. It will become the standard for these platforms to provide their clients relevant products and financial services. However, security cannot be compromised.
#4. Maintaining traditional banking capabilities
It is essential for existing banks to expand their digital capabilities to meet their customers’ needs, remain competitive against new entrants entering the industry, and integrate open, scalable platforms to offer even more services. However, it is also essential that incumbent banks maintain their traditional banking capabilities that many clients still rely on.
Designing a cryptographic architecture which enables adaptability and scalability
The digital revolution in banking and financial services is coming sooner than many people think. Neobanks continue to increase their market share of newly opened bank accounts throughout major markets.
But traditional banks can continue to lead the banking industry in the future by investing in technology, including cryptographic capabilities, to increase their digital, personalized, and multi-channel offerings to their customers.
It is of utmost importance that the banks remain in control of data security, even if parts of critical data and services are moving to peripheral locations scattered across a hybrid cloud of data centers, cloud storage providers, and external digital service providers.
A central enabler to such a development will be a centralized, intelligent, banking-grade cryptography management platform, which is able to deliver and control all aspects of strong cryptography and key management across a hybrid cloud environment and therefore maintain data control.
Such a system needs to offer crypto-agility in order to be responsive to all required strategic decisions or technological developments (e.g., post-quantum) without causing delays in the go-to-market times.
And lastly, such a system needs to make it possible that even the most innovative service idea can be conducted in a way compliant with regulatory requirements and industry standards.