Core and cloud providers are set to pour focus and funds into customer-facing innovation in 2022.

Last year saw the core and cloud industry extend its influence on business and retail banking, with core providers and banks forming deep partnerships. Regional, niche and major banks alike began investing in core and cloud for a competitive edge in seamless, tech-enabled digital banking.

The global core banking software market cleared a $9.84 billion valuation in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 7.8% from 2021 to 2028, according to business analytics firm Grandview Research. With that investment comes expectations for a positive return on investment (ROI), Steve Dow, CEO of cashflow management platform Monit, told Bank Automation News.

“In the coming year, we will see bank investments in technology continue,” Dow said. “All new investments will see much more scrutiny and need to prove direct ROI.”

Improving core and cloud experiences for retail and business consumers will be a focus in 2022 as providers look to enhance service capabilities and deliver customer insights. Digital banking leaders shared their predictions for core and cloud in 2022 with BAN.

Self-service acceleration

The move toward self-service innovation in 2021 that was driven chiefly by COVID-19 and a younger banking demographic is expected to continue in 2022, said Giovanni Mastronardi, group president of enterprise banking for IT consultancy CSI.

“We obviously had to accelerate the self-service capabilities we were doing,” Mastronardi told BAN. “If you know anybody who’s seen the way millennials and Gen Z interact, they go to a digital device first. They don’t think to go to a location first.”

Though many COVID-19 restrictions have receded in recent months, the pandemic created a change in banking preferences that are “permanent,” Mastronardi said. Core providers must continue to innovate to meet the needs of a digital-dependent public. “COVID kind of forced people to learn how to self-service,” he said.

Keys to improving self-service banking include implementing detailed card controls, which limit or eliminate the need for in-person banking while allowing partner banks to create and manage accounts digitally, Mastronardi noted.

“Online account origination is going to be big. We’ve got to be able to have every deposit and loan account through next year initiated online,” he said.

Cloud capabilities to meet legacy core

While banks search for the highest level of digital cloud innovation, many will align new tech buys with their current core infrastructure to meet commercial banking demand.

“Community and mid-size banks will increasingly start to build new digital bank businesses on modern cloud core technology in parallel with their legacy core,” Matt Kelley, director of the JAM FINTOP bank network, told BAN. JAM FINTOP is a joint venture fund of 66 community banks with more than $650 billion in combined assets.

“These new platforms will be primarily focused on growing commercial customers by embedding banking products into customer workflows in a fully digital way,” Kelley shared.

Features of these cloud-enabled innovations include customer platform specialization and flexibility. These will be vital in the competition between growing community banks and tech-driven challenger banks for small business customer share, Kelley said.

Digital edge for physical banking

Despite the widespread adoption of contactless digital banking, many consumers will continue to view a physical branch as their primary banking location in 2022, Mastronardi said.

“There’s still going to be a pocket of people who prefer to go into a branch, and there’s still a whole lot of people who prefer to talk face to face about it,” he said.

Automation-enabled positions like the new role of universal banker will be essential moving forward, Mastronardi said. Universal bankers use machine learning and cloud-based data synthesis to provide a combined banking experience for brick-and-mortar customers.

“The universal banker seems to be the way a lot of banks have gone and is now their primary way to support their branches,” Mastronardi said.

Bank Automation Summit, taking place March 1-2 in Charlotte, N.C., is the first and only event to focus solely on automation in banking. The event will feature the brightest minds from across financial services on intelligent automation strategies and deployment. Learn more and register for Bank Automation Summit 2022.