Customer demands, fierce competition and the need to diversify in order to grow have all been listed as major pressures facing banks and impeding innovation reveals the data-driven core banking engine, SaaScada as it reveals banks must be more willing to test new innovations.
Examining responses from 150 UK bank leaders, the report, Test More, Fear Less: The Case for Safer, Smarter Banking Innovation, SaaScada uncovers a stark divide between strategic ambition and operational delivery. Sixty-nine per cent of respondents say pressures to innovate in the past year have intensified, with nine in 10 admitting they’re being held back from moving at their desired speed.
Revealing the biggest hurdle to innovation, the report found that testing delays, such as issues with sandbox environments, are the biggest challenges; 71 per cent say risk-averse culture and red tape kill experimentation, making innovation impossible. Meanwhile, 62 per cent say legacy core banking has a chokehold on their business and they’re running out of air.
The report also identified an emerging divide between leaders and laggards with more than one in five UK banks (22 per cent) making basic changes like adjusting base rates in under a day, while it takes the rest, months. A third of banks can roll out new features (33 per cent) or products (29 per cent) in weeks, yet one in 10 still takes more than six months.
Furthermore, the report found that those directly involved with product development and delivery (e.g, product owners) said it took 176 days on average to launch a new product or service, while strategy leaders (e.g, CEOs) optimistically think a launch can be achieved in just 70 days.
Another major finding from the report was slow innovation’s impact on growth. Eighty per cent said sluggish innovation was hurting their business – fuelling talent shortages, resource wastage and eroding their competitive edge. Almost three-quarters (73 per cent) said the industry will never be a destination for talent if it can’t get its act together on innovation.
Slow movers need to pick up the pace
“The last few months have shown what a difference a day can make. In a world of tariff shocks, geopolitical turmoil and volatile rates, months-long innovation cycles are no longer acceptable,” comments Steve Round, co-founder and president at SaaScada. “Slow movers don’t just risk falling behind – they risk being dropped by customers and losing wallet share to more agile players.”
The report underscores the need for a new approach to core banking technology that empowers engineers to innovate, without increasing risk. With 63 per cent of banking innovation leaders expressing concern that ripping out their core banking platform is too costly and risky, it’s clear that a new way forward is needed – one that balances the need for stability and continuity with the need for agility.
- More than three-quarters of (79 per cent) banking innovation leaders say the industry must make core banking migrations less risky or accept falling behind.
- Eighty-two per cent want a safe and cost-effective way to experiment and test products.
- Sixty-one per cent agree that a shift to a pay-by-the-hour consumption-based model of core banking is long overdue.
“In every other facet of the financial services industry, solutions follow a consumption-based model, letting users test new products before diving in headfirst. It’s time that core banking followed suit,” adds Nelson Wootton, co-founder and CEO at SaaScada.
“By plugging in a truly cloud-native core that runs parallel to existing systems, banks can begin experimenting from day one, without committing to pointless RFPs or enduring months of delays from legacy technology. Without this shift, banks will quickly find themselves out of touch, out of time, and out of business.”
