How Digital Transformation is Transforming Banking

Traditional financial institutions have been around long before the arrival of the digital age. Their time-honored presence and decades of experience are largely a good thing, but the legacy technology platforms that come with them are not.

Now, in a digital-centric market, long-established banks are no longer competing with only each other. Due to internal and external pressures for more innovation-driven business models—advanced consumer needs, antiquated legacy infrastructure, the latest digital technologies, and so on—neobanks and financial technology companies are now some of these legacy banks’ most prominent competitors.

Tech companies that offer banking services know how to meet consumer expectations by implementing modern technologies like cloud computing, big data, blockchain technology, and artificial intelligence to stay alive in today’s competitive financial landscape, slowly leaving banks behind. Lockbox services are still an important product of commercial banking treasury management services. Bank lockbox services quickly handle the collection of paper-based payments like checks to update accounts receivable records and drastically reduce the burden on businesses on behalf of their clients. There’s still a massive amount of checks in the US alone—15 billion—and traditional banks use separate infrastructure for Wholesale (business-to-business checks) and Retail Lockbox (consumer-to-business checks) that used to be justifiable by the higher volume of checks.

How can traditional banking transform its operations to better serve customers and stay competitive? Banks must move to a new infrastructure that can handle “wholetail.”

The Future of Data-Driven Banking

End-to-end digital transformation is necessary for banks to support modern customers, drive efficient operations, and rapidly innovate. Dependable legacy systems are reaching the end of their service life, and a change is essential to stay profitable and relevant in the industry.

A complete digital transformation is the primary obstacle holding most banks back from the digital banking revolution. According to a Cornerstone Advisors study, only about a quarter of banks and credit unions had embarked on a digital transformation strategy before 2019, and 45% hadn’t launched a strategy prior to last year.

The hesitation—voluntary or otherwise—is understandable, as the average company loses over $5 million on failed digital transformations. No one wants to risk invested resources or end up driving the company into debt over a bad tech purchase. Still, it’s the only way to create new levels of value and growth for the future. Legacy systems are one of the riskiest operations an organization can have that can cause undesirable yet avoidable consequences. They create bottlenecks for your processing capacity, and since they’re upon their end-of-service date, cybersecurity and maintenance also become issues. With proper strategic planning and decision-making, banking leaders must be smart about which technologies they choose to implement and how they will be deployed.

At ibml, we help modernize legacy infrastructure for our banking customers to retain their clients and provide treasury management services. As a leader in check processing ibml FUSiON systems, we are eqipped to handle “wholetail” lockboxes, and are today being adopted by clients to modernize lockbox operations to handle both wholesale and retail, ensuring business continuity, security and profitability. Now, 30 years since ibml’s founding, data is the currency, language and commodity we all use for transacting.

Data is quickly becoming a cornerstone of how banks operate and a vital component in digital transformation for modern banking. It’s the communication tool of the future with great potential to ensure financial institutions keep pace in this rapidly evolving industry. ibml is at the cornerstone of this trend, helping clients extract valuable information from unstructured documents in both paper and electronic records