The Covid-19 pandemic is pressuring retail banks to transform into a platform-based approach while increasingly pushing customers to bank digitally.

According to the World Retail Banking Report 2020 by Capgemini and Efma, progressive core banking transformation enabled by the shift to platform-based models can help banks take swift action to improve innovation, growth, profits and operational efficiency.

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The report reveals that 56% of consumers now prefer internet banking as against 49% before Covid-19 and 55% prefer using banking apps, up from 47% previously.

Capgemini financial services CEO Anirban Bose said: “Consumers expect a seamless digital experience from their financial providers, as they’ve grown accustomed to bigtechs in other parts of their lives.

“Banks that invest now in modernizing their core technology and evolve it to a platform-based experience will simultaneously delight customers and grow profitably.”

Efma CEO John Berry said: “Covid-19 has put a spotlight on the digital banking experience. The modernization of legacy systems must be prioritized by banks looking to accelerate their growth as customer expectations are ever-increasing and those that neglect this risk falling behind.”

Other notable findings

An overwhelming percentage (80%) of bank executives cited cybersecurity and privacy as major concerns, 68% cited outdated data management and 73% identified the right partners as key factors for moving to a platform system.

Banks can buy or integrate a new platform, build their own platform, or share a ready-to-use platform to transform into a platform-based model, the report suggests.

Nearly two-thirds of the respondents said it takes up to two years to launch a new product when working alone, while 58% said it takes less than a year when collaborating with a fintech or bigtech.

The report suggests that financial institutions must embrace the Open X banking platform to transform into a platform-based model.