It is no secret that the number of traditional bank branches is steadily declining. This global trend has been driven by the rise of digital channels such as mobile and online banking, and subsequently by changing customer expectations. As the Wall Street Journal notes, 53% of all banking transactions are now made via a mobile device, compared to just 14% in bank branches. Banking customers have always sought convenience; however, the definition of convenience has changed!
These changes offer forward-thinking banks some interesting opportunities to leverage custom-built applications to drive the success of their businesses. In the coming years, analysts predict that we will see “richer” mobile applications that encompass far more products and services. The channel will even help to shape the products and services that are offered, with purpose-built mobile checking accounts, for instance.
Due to the nature of mobility, additional revenue-generating opportunities have also emerged for the banks. Contextual Promotion and Mobile Payments will begin to be big growth areas in 2013 and beyond. Custom-built software applications will play a big part in that, as banks look to make location or demographic-based offers to customers, while digital wallet capabilities will enable the customer to complete their transactions on the move.
Last but not least, is the good ‘ol bank branch itself. While declining in number, the bank branch is certainly not going away completely. It will instead evolve into a presence that will better align with the needs of the modern day consumer: smaller, more agile, with a range of (predominantly video-based) services offering customers the one-on-one expert interaction they seek, while keeping overheads at a minimum.
The IT organization within a bank is a notoriously complex place. The size of the company, the nature of the business and the value of the commodity all add to that complexity. As a result, it is vital that IT organizations position themselves for success by having the right tools in place to capitalize on the software-based opportunities of the future.
In order to provide a bank with the required capabilities, it is essential that its developers get access to the right tools to assist in writing high quality, enterprise grade applications. Furthermore, the tools should help to enhance the code that is being written for the cloud-based technologies of today, rather than merely providing value during deployment. That said, new tools cost money, and this usually means that a budget has to be established by trimming IT legacy which, according to Forrester, can account for 70% of the existing IT budget.
Finally, there is the issue of data security. Banks are among the most highly regulated organizations in the world (and rightly so!). Therefore, IT organizations need to enable the mobile business strategies of the bank while – under the continual threat of cyber attacks – keeping services operational, and customer data secure.
If banks are to succeed in acquiring new customers, make existing ones happier, reduce costs, differentiate themselves from the competition and exploit new revenue streams in this mobile age, the software they develop in-house becomes a critical enabler.
By decoupling applications from infrastructure, and developers from IT (the core value proposition of a PaaS solution) banks can improve developer efficiency and performance, get software applications to market faster, enhance infrastructure performance and reduce IT legacy; keeping all internal stakeholders happy and customers delighted. The fact that Private PaaS enables all this while providing the security, control and compliance of private infrastructure keeps the CISO happy too.
We are seeing big demand from banks for Private PaaS. Here at Apprenda, for instance, we are already working with 13 of the top 20 banks in the US, including JPMorgan Chase. By adopting Private PaaS, JPMorgan Chase has seen a 700% increase in developer productivity (yes – that says 700%!), an application time-to-market decrease of 59 days, a 300% increase in infrastructure utilization and a 45% reduction in infrastructure costs. Needless to say, they are better positioned than most to leverage their mobile opportunity!