What do banks want in 2025? Of course, they want to deliver personalized frictionless customer experiences and engagement, stride ahead of the competition, and run a profitable business. But while these are overarching goals for their business, banks must also transform certain processes and strategies to get there. They know that it is imperative to do more with less in a challenging market scenario marked by fluctuating interest rates, regulatory pressures, and disruption. As a result, banks have sharpened their focus on ensuring operational efficiency to plug revenue leakage and manage costs even as they deliver personalized innovative offerings to their customers.
Operational Efficiency a Top Priority in 2025
In a recent survey, bankers ranked operational efficiency in the top three business challenges they have to address this year.1This is a first for the sector that has usually focused on customer acquisition and deposit growth. The shift in priorities is understandable considering the tough market conditions that banks are operating within today – tight margins, unstable interest rates, strict and evolving regulations, a disruptive technological landscape, increasing competition, and changing customer expectations. Despite some progress on the digital transformation front, many banks still work with legacy core systems that lack the agility and scalability required for driving innovation, plugging revenue leakage, and ensuring efficient operations.
The Challenge of Technology Integration
Banks are looking to accelerate technology integration to address their operational efficiency goals. Investment in technology tops the priority list, along with improving customer digital experience and addressing fraud. But technology integration and improving customer digital experience is complicated by the challenge of human behavior. As millennials and Gen Z customers entered the formal banking economy there was greater emphasis on digital channels and on-demand access to services and products. The restrictions of the COVID-19 pandemic gave further impetus to digital banking. But as the disruption of the pandemic eased, it became evident that customers were not willing to completely give up on in-person interactions with their financial institutions. Most customers wanted in-person engagement on high value or complex activities like loan applications, opening or closing accounts, as well as advisory services. And they preferred digital channels for transactions and deposits. More than 44 percent of customers said their in-person interactions with their bank was excellent, while only 11 percent said the same of their digital banking experiences.2
How a Robust Middleware Solution Can Drive Operational Efficiency
When it comes to improving operational efficiency or reducing operating costs, most banks either shut down entire branches or rationalize staffing across branches. But clearly this is not the answer as in-person engagement still holds significant value. Instead, banks must consider investing in the right technologies to drive a frictionless experience across channels, ensure personalization across both physical and digital touchpoints, and reduce process redundancies and inefficiencies through automation. And they don’t even need to overhaul their legacy cores to do this. They can simply deploy a robust, cloud native, microservices-based middleware revenue management system over their core systems to automate processes, drive personalized strategies, improve deal management, plug revenue leakage, and ensure operational efficiency.
With a platform like this in place, banks can cut through organizational silos to unify data and analyze it for actionable insights into customer behavior. This can then help shape personalization strategies that can be across digital and physical channels. A bank teller would benefit from insights on customer’s relationship with the bank and their financial habits. And banks could use this information to curate offers, bundles, pricing, and even rewards that meet their requirements. Sales teams would be better equipped to offer discounts to customers that meet their requirements while protecting the bank’s profits. An agile and powerful middle layer can also help banks leverage the power of AI for better data analysis, and even autonomous functioning. For example, with a powerful scalable middleware solution in place, banks can explore emerging AI technologies to analyze customer data in real time, analyze market trends, and give the customer real-time advice on investments. AI can also help improve fraud detection and risk management.
There is no doubt that operational efficiency is crucial for growth and profitability. And the right technology platform can help them streamline processes across physical and digital channels to drive efficiency.