Customized Development vs. Out-of-the-box Software
Today banks, credit unions, and financial institutions are in a constant battle to offer users the latest technology features. Features like cards on/off, mobile deposits, and card management seem to be among the standards users have grown to expect within the ever-growing fintech industry (common competitors in this space include PayPal, Venmo, and Cash App).
As a software developer focused on created financial applications, I’ve learned that these features do not come easily. Let’s discuss why.
Many financial institutions already use out-of-the-box, white label banking systems for their digital experience.
The majority of the small banks and credit unions’ core banking solutions are developed and maintained by only a handful of vendors. This results in banking products which are built on the same functionalities that, unfortunately, are not easily customizable during the development process.
Although an out-of-the-box solution may seem like an economical way to go, this introduces severe limitation in customization and competitiveness. White labeled banking systems provide a consistent build and user experience regardless of the financial institution. Adding new features that are unique, company-specific, and user-centric to a banking institution becomes a complex challenge.
Core banking systems often provide the necessary backend infrastructure. Banking applications rely heavily upon an infrastructure that includes a white-labeled user interface. Yes, this user interface can be customized to fit a financial institution’s branding (i.e. logo placement, terminology, and mainstream features).
So why choose an in-house solution instead of an out-of-the-box product from the system vendor? A custom solution helps financial institutions secure quite a few advantages.
Custom provides the tools users want:
Core systems provide very common modules and services readily used by financial institutions. However, such services fail to cut it in this competitive fintech environment. Innovation is key in engaging customers and an in-house solution provides the flexibility that gives users the latest features. In our recent deployment with Virginia Credit Union (VACU) we added a simple new feature to its banking platform: displaying account and routing numbers. Our custom solution was able to resolve many of the limitations presented by the white labeled vendor’s ERP.
Custom design for a thoughtful customer strategy:
Some vendors may provide a customizable interface (think drag and drop elements, color pickers, etc.) within their core system. These customizations cannot account for the unique needs of every financial institution. The core system used at VACU provided a tile layout with drag and drop elements. Based on their users’ feedback, VACU wanted to steer away from this layout, but the core system was not flexible enough to accommodate the desired usability strategy.
Custom solutions saves money:
A custom solution adds value to customer expectations because a thoughtful roadmap will be dependably better received than plugging in half-baked modules Always start by building on what your users expect from your business. Deploy a solution from the ground up that is thoughtful of the end-user rather than pushing in the core system’s ERP that can be a mismatch to the way the bank operates.
Core system ERP’s are designed to capture the needs of a general audience — they succeed with the broader picture but sometimes fall short when getting into the details of what makes one bank unique from another. Custom can provide an opportunity for banks to stand out, listen to their customers, and create an experience that is tailored to fit.
In the case of VACU, customers were looking for a way to access routing and account numbers, but the cost of producing this feature from the ERP system was prohibitive. The vendor’s resources would need to be allocated directly to the financial institution – which would have ended up costing the union both time and money. The credit union chose Shockoe to rebuild a customized accounts module so that the feature would be present.
When to consider custom:
VACU’s mobile roadmap stated that certain features were integral to driving repeat mobile traffic and engaging a growing contingency of young users that won’t step foot in a bank. Therefore, VACU paired up with Shockoe to steer away from some of the core system features that were currently dictating their mobile user experience (more on this in our complete case study here). They wanted to keep the necessary parts of the core, such as the backend infrastructure, but rebuild the UI from the ground up with new designs and added functionality.
How we approach custom:
To follow the agile approach we use here at Shockoe and to accommodate our client’s needs, the application architecture was split into different sprint-sized modules: View Accounts and a Transactions module. Each new module was developed based on VACU’s prioritization, and deployed by embedding it into their existing application without disrupting the existing UI and UX that would house it.
The idea has been to progressively rebuild their online banking platform modularly until the whole platform can be replaced with the custom solution.
Users deserve a digital experience flexible to their needs and expectations as they are constantly shifting. I’ve had the opportunity to work first-hand on an application that increased productivity and provided cutting-edge technologies to the highly loyal customers of VACU. As with most financial institutions, staying innovative and user-centric is the key to succeeding in both the digital and brick and mortar space.