Integrated Banking: Financial Ecosystems of the Future

Financial institutions must break through the traditional banking business model and focus on collaboration, integration, and innovation in the financial services sector.


Banks have historically had a stronghold on the majority of financial services and products; however, the disintermediation and commoditization of banking services has required financial institutions (FIs) to reconfigure strategies and look outside of themselves toward more collaborative business models.

The new focus is on providing an optimized consumer experience across a breadth of channels and devices. To do this, FI’s must introduce new products on new channels—many of which may live outside an FI’s own domain. The end result will be a newly instilled perception of banks as trustworthy and convenient places for consumers to manage finances and payments.

Along the way, FIs will need to partner with innovative fintechs to expand customer touchpoints across financial services and enhance financial service offerings. By expanding beyond traditional core banking services and aiming to help simply consumer finances, a new banking ecosystem will emerge that will present new revenue opportunities for banks, a better customer experience for consumers, and new partnership opportunities for fintechs.

Upending the Status Quo

In the U.S., the development of ideal banking ecosystems has been hamstrung by regulatory hurdles as well as the status quo in banking behavior. Despite this latency, the rumblings of change are beginning to take hold. As traditional banking services become commoditized, banks are actively seeking out new revenue opportunities, many of which are centered around needs-driven solutions. In moving away from the traditional method of pushing financial products on people that may or may not need them, banks are beginning to understand the importance of a customer-centric experience for all products and services. This notion is underscored as non-banking disruptors begin to toe the line into financial service offerings (Google, Amazon, Facebook, Apple, among others).
What’s more, the drive towards a more open ecosystem is already taking hold outside of the U.S. The aftershocks of PSD2 along with advancements in technologies like APIs, artificial intelligence (AI), machine learning, and the Internet of Things (IoT) have motivated the financial services industry to get serious about looking at integration and collaboration to support more robust business models.

The PSD2, in particular, has been instrumental in compelling FIs to consider an open API strategy in the U.S. While the regulatory system here is often leery of emerging providers of financial services, the efficiencies beginning to take form in Europe as a result of PSD2 make a fascinating case for heading in this direction. The “access to accounts” provision of the directive opens up customer bank account data to third party providers to introduce new payments and account information services. The directive also aims to strengthen authentication, providing a more holistic, secure, customer-centric experience all-around.

Banks now find themselves at a crossroads where they can stick to the commoditized account servicing business or find new revenue streams by partnering with fintechs to activate innovation in the financial services sector. Regardless of how banks choose to participate, financial services and payments are rapidly evolving as the digital revolution spreads.

Integrated Banking Systems of the Future

A great example of how some of this is beginning to take shape in other countries is WeChat, a Chinese multi-purpose messaging, social media and mobile payment app. Users can access the integrated system through their smartphone and use it to make payments, book doctor appointments, pay electricity bills, and participate in video and conference calls. In 2018, WeChat had over 1 billion monthly active users, making it one of the world’s largest standalone mobile apps.

The need for easy integration of systems across FIs and other service providers is undeniable. Advanced analytics, cloud-based platforms, machine learning, open banking APIs and AI models will be integral in this integration to provide a competitive customer experience that boosts loyalty and creates new revenue streams. As these advanced technologies open financial products and services up to non-bank providers, banks must decide what steps to take to remain competitive.

Cloud is a Key Factor

Cloud will play an important role in streamlining the new digital customer journey. Legacy systems that inhibit banks from innovating will need to be replaced with more cost-effective, agile platforms and integrations. In addition to eliminating the costs associated with software and hardware maintenance for on-premise systems, the cloud enables FIs to leverage third-party ecosystems using open APIs with minimal investment.

FIs can utilize cloud solutions and even pre-built integrations to streamline the customer experience across payments, lending, and more. Speed of integrations and development will become increasingly important and the cloud can facilitate direct connection between ERP, accounting, and other financial data systems to create real-time insights. In short, the cloud can enable FIs to bring innovative digital experiences to market more quickly and more cost-effectively.


The open banking movement will soon become the status quo as customers continue to adapt to and demand digital one-stop-shops for all financial services and payments needs. Banks will need to innovate to move beyond the commoditized back-end processing role and into a more collaborative role that provides customer-centric products and services to meet market demand.

Partnering with fintechs and leverage cloud infrastructure are two major moves in the right direction. FIs will need to collaborate and tap into agile development methodology to remain competitive and to creatively innovate.

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