How to Select the Best IT and Software Provider for Your Digital Bank

The best software developers for digital bank and fintech in saudi arabia

Digital Banking Transformation is Customer-Centric

Incumbent or traditional banks are overwhelmingly and notoriously product-centric.

Which isn't necessarily wrong, it just happens that the vast majority of the digital banking products and services are irrelevant to us. 

On the other hand, neobanks and fintech operators (nonbanks) are customer-centric and relevant. It's why people are increasingly adopting them.

Neobanks and nonbanks address specific problems or target a niche market. Sometimes they do both - like Banki, a Jordanian based neobank that provides much needed credit and banking services to the much ignored freelancer community.

Traditional banks realize that they must transform. For this transformation to be actually impactful, they must change their strategy, operations model, and mindset. Banks must become customer-centric too.

Customer-centric banking depends on a real value proposition that must be identified through an ongoing effort referred to as product discovery. After all, banks must release products and services that people actually want to use.

Once a bank identifies their human-centric value proposition, they can proceed to identify the ideal technologies needed.

Technology is at the core of digital banking and a critical aspect of a bank's digital transformation is to create a cutting-edge and well-functioning tech stack.

This includes revamping the bank's IT architecture and systems which includes their front, middle, and back-end (as well as their API layer).

What Does a Digital Bank Look Like?

Digital banks are more than just leveraging digital channels. The major characteristics of a digital bank are often:

  • Real-time and 24/7 on-demand service availability
  • Multilingual, dynamic and personalized experiences
  • Best-in-class accessibility standards
  • Infrastructure flexibility and scalability
  • 360-degree insight into customers through data collected across all touch-points
  • Seamless omni-channel content and communication management

Read: How To Build a Neobank: Mobile Banking Development Process

How to Select the Ideal Digital Banking Software Partner?

The number of IT and software development vendors is growing everyday, which means banks are not short on options. However, this fact doesn't guarantee that the partnership will be a successful one.

Most partnerships between banks and IT vendors have failed due to a variety of factors:

  • No agile product/project management process
  • Lack of 24/7 availability across different time-zones
  • No shared vision or objectives
  • Lack of required resources, expertise, talent, and technologies
  • Poor coordination between client and vendor
  • No dedicated focus on project
  • Poor support and maintenance

Despite all of these recurring issues, banks (and most businesses to be fair) still continue to take unnecessary and expensive risks instead of investing their time and money into making the right decision.

At this critical stage of "transform or die" - banks cannot afford to make the wrong decision; especially when their competitors are trying to be the first provider of certain digital products or the fastest when it comes to software delivery.

But how does one choose the best option for a bank and ensure that the decision is made objectively and strategically?

We've compiled the primary stages to consider when selecting an IT vendor for your digital bank based on our extensive expertise with successful core banking selection and implementation projects.

Phase 1: Gathering Requirements

Before you begin the process of finding an appropriate IT and software development partner for your bank, you must first have a clear grasp of the entire needs.

These needs may be generated from the digital bank's current business strategy, and they should contain not just a high-level notion of the long-term IT architecture, but also a thorough understanding of the larger business context and regulatory environment.

As being the team member in charge of finding ideal software outsourcing partners; you must have a thorough awareness of the company's business history, as well as a clear understanding of the company's future strategy, target market, present capabilities, and business architecture.

For example, below are some of the questions that should be asked before reaching out to outsourcing partners:

  • Do we have the in-house IT experience and information to make an informed decision?
  • How soon do we want to put our product on the market?
  • What products and services do you need to develop in the future?
  • Are we optimizing existing products and services?
  • Or are we launching a new product to service unmet customer needs?

All of these issues, as well as others, must be answered ahead of time in order to ensure that your bank's technical and business requirements are aligned.

Need help identifying and aligning your bank's requirements? Contact us for a free consultation.

Phase 2: Preparation of Selection Criteria

Following the collection of all your requirements, the preparation phase begins - during which your bank must set the necessary selection and assessment criteria for suppliers and vendors.

These criteria are used to analyze the various suppliers in the future and are an important part of the planning process.

When preparing your criteria, remember that banks are more than just basic banking platforms. A bank's digital experience includes a variety of components and complex integrations.

This means that the bank may require the services and expertise of numerous vendors - each distinct in the expertise and technology provided.

While some vendors simply supply the basic banking system or specific value chain services, others provide full-stack banking solutions as a one-stop shop, encompassing product solutions, white-label licensing, payment and card scheme access, and even cloud infrastructure.

Some significant things to consider while developing the selection criteria are, as a general guideline:

  • Functionality: Scope and future business goals
  • Technology: Required technology offering for defined IT architecture
  • Implementation: Available resources locally, internationally, via partners and/or in-house
  • Company: Information about the vendor's expertise in financial services and banking sector (i.e. case studies)
  • Financial: Price range; quoted price vs ongoing budget

The preparation phase will be completed with an initial market scan of banking technology and implementation partners in the market. This quick research will provide you with a short-list of IT vendors and software outsourcing partners that specialize in banking and fintech digital product development.

Phase 3: Selecting a Software Development Partner

The selection process begins with the creation of a shortlist of eligible IT vendors and software partners based on the previous phase's work as well as the RFI questionnaire writing.

The Request-For-Information (RFI) is a helpful tool that helps your refine your shortlist of candidates. Send your RFI questionnaire to all the vendors on your shortlist and cut down that list of prospective vendors based on the feedback received and your selection criteria.

Once your shortlist is refined to the most relevant vendors and software outsourcing partners; send them your Request For Proposal (RFP).

When handling the RFP process, it's critical to make sure that all of your prepared material is shared with all suppliers to guarantee a fair and impartial selection process.

After gathering all necessary information and commercial bids, it is recommended that you do numerous Proofs-of-Concept with a limited number of the most relevant suppliers before entering into final negotiations.

If all goes according to plan, the bank should now have a good sense of which IT solution provider is the greatest fit for its future goals.

Download Guide: Tech Outsourcing Partner Governance and Management

How Sitech Can Help

Choosing an IT and software vendor for your bank may be both exciting and difficult, and you will almost certainly want assistance along the route.

Sitech is a leading digital enterprise transformation agency in the fintech space and the strategic technology implementation partner for Backbase - the world's leading engagement banking platform. In addition to transforming legacy organizations, we enabled banks to plan, design, develop, and deliver digital banks and new digital banking solutions faster than their competition through our Managed Software Teams.

Book a meeting with our consultants at your convenience or contact us today with your requirements.