Why financial services must embrace a new architecture

For too long, many financial services firms have clung to a tired formula. They build generic, mass-market financial products on creaking, legacy systems, push them to the market, and rely on outdated brand loyalty for growth. In a rapidly evolving industry, this approach is not just ineffective—it’s dangerous and costly. It leaves little room for innovation and new technology investments, with legacy systems consuming more than 75% of IT budgets in many financial institutions. 

Customer expectations have leapfrogged ahead, driven by convenience and personalisation that customers receive with brands like Amazon, Netflix, and Uber. Challenger banks like Revolut and Monzo are also raising the bar with more personalised, user-friendly services. Now, customers want more than the same old financial products. They expect personalised, seamless, and easy-to-use services—and consumers are increasingly embracing digital alternatives, with over 14 million UK adults (27% of the nation’s population) now holding accounts with digital-only banks, triple the number in 2019.

While traditional players are bogged down by costly and rigid architectures, their rivals are scaling fast with tech-first approaches. These challengers might still have room to improve on human-based customer service and can struggle with profitability due to their limited customer base, but it’s only a matter of time before they take market share. 

There is still an opportunity for financial institutions to win this battle for customer choice. However, it will require them to radically rethink their approach to developing and maintaining customer service. 

The vision: Redefine or get left behind

Our vision is simple; build a modern technology architecture that enables unmatched service throughout a customer’s financial journey. This requires a complete overhaul of how firms operate and view technology. They must rethink what to build, what to buy, and how to seamlessly integrate with the wider financial ecosystem. Only then can they create the ultimate customer experience while focusing on what truly differentiates them.

To thrive in this future, financial services providers must shift their operations from siloed, product-centric models to a unified "customer loyalty hub," powered by a transformative technology architecture, and focused on delivering personalised experiences and exceptional service. 

Firms that nail this transition will grow their base of digitally-active customers and increase product penetration, driving both loyalty-based and new customer acquisition profitability. The numbers prove it. Research from Forrester reveals that banks excelling in personalised digital experiences see up to 25% higher customer retention rates and a 20% increase in cross-selling success for digital offerings. Meanwhile, a Qualtrics survey of over 550 banking customers, highlighted that 69% of respondents cited poor service as their primary reason for switching banks.

The message is clear. Customer experience and service excellence are the new battleground.

The architecture for success: Build the foundation now

As a first step on this journey, financial services providers should map the critical moments in a customer’s financial life—from opening a current account, obtaining a loan, insurance policy, or mortgage to managing lifetime investments. For each of these moments, firms need to define a core set of products and services, focus on delivering an exceptional customer experience, and execute a technology strategy underpinned by three architectural dimensions:

1. Build the core technology ‘spine’ internally for personal differentiation
2. Buy external for commodity and repeatable processes
3. Integrate with third-party services and financial marketplaces

This transformation will require more than technology acquisition. It demands bold leadership and a seismic shift in digital, data, and artificial intelligence (AI) capabilities, along with a fundamental rethink of talent and culture.

To navigate these technology changes effectively, product leads, CIOs, and CTOs should consider how to apply architectural dimensions to the following foundational principles, taking a step towards future-proofing their architecture:

1. Customer-centric design: Redesign product siloed systems to enterprise architectures centred on the customer—not around outdated product or functional silos. This means putting customer data at the core, moving to a needs-based financial product and servicing model.
2. Digital-first interaction: Build an omnichannel architecture with a mobile-first entry point, seamless digital ID verification, and AI-powered chatbots to support customer queries. Providing customers with 24/7 access to their accounts and financial products through digital channels improves convenience, reduces the need for branch visits, and drives down cost to serve through call centres.
3. Business & technical capability federation: Diversify platform ownership based on business capability by focusing on core internal builds for business capability differentiation, while making use of as-a-service models for non-core financial services products.
   
4. Cloud adoption: Embrace cloud technologies for scale and innovation. Use microservices to update components without disrupting the entire system. A well-designed cloud strategy can also improve the stability and resilience of critical financial services.
5. AI and machine learning (ML) integration across everything: Infuse AI and ML into all services, from enhancing fraud detection and credit decision-making to personalising services and providing intelligent customer support.
6. Real-time data analytics: Gain data-driven insights with robust governance and real-time processing to support instant credit decisions, dynamic financial product pricing, and immediate detection of unusual account activity.
7. Security and compliance: Embed advanced security measures, including multi-factor authentication using biometric authentication for secure access to digital channels and implement state-of-the-art encryption protocols across integration services.    
8. Integration and interoperability: Seamlessly integrate with external ecosystems via comprehensive API strategies. Use open banking data and finance to allow customers to connect their financial services provider with third-party services.
9. Risk management: Enhance risk profiling with AI and strengthen cybersecurity measures to manage both financial and operational risks. This includes increasing the accuracy of credit risk models, while using dynamic monitoring, alerting, and analytics to mitigate operational risks like system failures.

Tomorrow belongs to those who act today

The financial services landscape is transforming rapidly. Those who embrace this new architecture aren't just future-proofing their business—they're revolutionising their entire approach to customer loyalty. They'll evolve from traditional product providers into trusted, lifelong financial partners who anticipate and fulfil customer needs before they arise.

But this transformation demands more than just technological investment. It requires a fundamental shift in organisational DNA—from data strategies and cultural mindset to bold, business and technology visionary leadership. The most successful firms will be those who recognise that architecture isn't just about technology—it's about enabling the business to build the foundation for customer relationships that last generations.

How ready is your technology architecture to embrace the future? Contact us to see how we can help you build the technology foundations for tomorrow, today.