According to a recent report from Accenture, European fintech investment tripled in 2014, highlighting the rapid shift towards software fueled financial services. While the region is the fastest growing in the world for fintech investment, frequent news of high-profile online banking glitches – such as the recent RBS and NatWest mobile app failure – are causing consumers to lose confidence in their banks.

This leaves CIOs looking for an answer to the most pressing question in the sector: how do you drive software innovation while maintaining a high level of customer experience and a constant revenue stream?

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Consumers are no longer distinguishing between online and offline worlds – they expect all experiences to be seamless. App-happy consumers would sooner turn to their smartphones than head for the high street to endure queues and conversation with a bank manager. As mobile applications are often the primary channel that consumers use for banking, banks need to adapt now to avoid fading into irrelevance.

What is holding us back?

Accenture surveyed 25 senior banking executives from across European banking organisations –  three quarters of respondents felt their banks have a 'fragmented or opportunistic' approach to dealing with digital innovation.

Furthermore, the report details that 40% think the time it takes their organisation to deploy new technology is too slow. This is noted as negatively impacting organisations’ ability to realise value. The majority is reported to believe that the banks lack the 'skills and culture needed to succeed in the digital age.' This state of play is contributing to the rise of challenger banks across Europe.

The rise of the software-defined bank puts a renewed focus on innovation; however, one of the main pressures on banks today is the increasingly high standards of performance and reliability that consumers demand from their mobile apps.

Given growing competition in the retail banking sector, mobile banking apps must meet the highest standards of performance and reliability regardless of time, location or device. Additionally a great mobile banking app must also provide a far greater range of services than traditional banking, all in context of customer.

To achieve this, banks must ensure customers have 24/7 access to key services, whether it be through proactively predicting when their applications will experience surges in traffic or spotting and fixing emerging glitches in real-time, before they impact experience.

The need for financial services apps to function like Facebook

If banks aren’t performing with the accessibility of Facebook, they’ll soon be paying a higher price as customers will take their financial services needs elsewhere. Legacy systems are currently the bane of the banks; it costs time, money and raises the bank’s risk exposure, to implement better systems into an organisation’s technology infrastructure. Crucially, CIOs will need to think more about the performance of their applications if they are to remain relevant.

Application intelligence and performance monitoring solutions will be even more necessary if other organisations are to follow suit. 

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IT departments need to look at where the most value can be added in innovating financial services IT. Ageing legacy infrastructure coupled with consumer culture of managing their accounts online means many banking applications are not providing the performance – or even the services – they need to, in order to remain competitive.

The solution for the software defined bank

Providing perfectly-performing mobile apps that can deal with millions of transactions a day often relies on complex, distributed applications working seamlessly. It’s made harder still by the added complexity that comes from managing the mix of the requisite software, hardware, cloud services, app developers, third party web services and so forth. All this, piled on top of the antiquated legacy IT systems that many traditional banks have accumulated, makes for a potentially risky situation that neither challenger nor traditional banks can afford.

Software defined banks with highly complex IT architectures need to employ sophisticated analytics and monitoring applications to help mitigate the risks mentioned above. APM (Application Performance Management) solutions give online financial services certainty about the operation of their business, IT infrastructure and applications in real-time, and enable them rapidly respond to, or even predict, issues that may arise.

The internet-only Atom Bank might just be what Britain needs, so perfect performance will be imperative in a software defined age where digital dispensation is never given on loan.