Digital banking solutions provider Backbase was ranked best-in-class in a new evaluation of eight banking point solutions vendors.

Aite-Novarica Group‘s assessment taps the Aite Matrix, which looked at elements including vendor stability, client strength, client services and product features to determine vendors’ overall competitive position.

Other banking point solutions vendors in the evaluation ― though the list was by no means exhaustive ― include Access Softek, Alkami Technology, Apiture, MEA Financial, MX, NCR and Q2. In Aite Matrix: U.S. Digital Banking Point Solution Providers, Netherlands-based Backbase, which was founded in 2003, had a blend of highest or high scores across the four category measures above.

Q2, Backbase and NCR received the highest scores in vendor stability; the report notes that many vendors in this space are well-established “with strong financials, growth rates and reinvestment in research and development.” Backbase and Q2 topped the client strength category, “due in part to their pipeline of new business, diverse client base and strong brand as a leader in the industry,” according to the report.

Banking point solutions vendors have been sharpening their client service skills. The report calls that measure “the area in which vendors have shown the greatest improvement over the last couple of years,” with better communication, quicker issue resolution and “making their clients feel as though their suggestions are being heard.”

Vendors have also beefed up their products as tech-savvy clients put pressure on financial institutions (FIs), which in turn have demanded more their from digital banking solutions providers.

“Backbase finished ahead of the competition in this year’s Aite Matrix report, finishing squarely in the middle and demonstrating a strong balance of both vendor strength and product performance,” the report states. “The vendor has been able to successfully grow its brand over the last few years and is now a contender in most banks’ vendor evaluation processes, regardless of bank size.”

In determining vendors to include in the report, Aite-Novarica Group considered:

• Bank awareness of the vendor as a provider of a viable digital banking offering;
• Successful implementation of a digital banking solution at a minimum of one U.S.-based FI and the ability to provide client references; and
• The ability to offer a full out-of-the-box solution rather than just components of one.

Banking needs and expectations have been evolving, the report says, noting as others have that some of the changes have been accelerated by the pandemic. “Clients’ and customers’ expectations alike require easy access to the digital banking and customized experiences and views not only within retail banking, but also across small business and corporate banking,” the report states.

Aite-Novarica Group estimates that U.S. banks and credit unions spent about $1.9 billion on new digital banking solutions last year, up from $1.8 billion in 2019. The group believes that growth will continue; Aite-Novarica expects U.S. banks and credit unions will spend a total of $2.1 billion this year and nearly $2.26 billion in 2022.

Among the trends driving the move toward digital banking is the potential for artificial intelligence (AI) to enhance the customer and banker experience, according to the report, including by utilizing the untapped potential in data FIs already have.

Further, digital banking solutions can also deliver supplemental information about a customer to do things like help a call center agent resolve an issue or offer additional products and services, the report notes.

Another big trend in digital banking adoption is the use of application programming interfaces (APIs) “to pull in new capabilities that will optimize existing digital experiences or create new experiences.” In addition, Aite-Novarica Group notes, APIs can be bi-directional ― a two-way street through which the FI can not only feed but receive data, leading to more potential uses.

“The partnership of multiple fintech developers that plug in to APIs allows FIs to spread the cost of innovation and shorten the time to market for bank-provided transaction services,” the report states.