UK banks are navigating a transformative shift towards a fully digital presence, with 2025 expected to see even greater adoption. As branch closures leave many customers without local access, questions remain about maintaining service quality and customer trust online. We spoke with Tom Fairbairn, Distinguished Engineer at Solace, to explore these challenges and solutions.
What do you see as the biggest challenges UK banks face in transitioning to a fully digital presence, especially in maintaining customer trust and service quality?
UK banks face a range of challenges when transitioning to a fully digital presence. Many legacy systems are outdated and inefficient – the main challenge is integrating them with modern technology. This challenge can prove difficult as modernising legacy systems requires significant investment and time, as it needs careful planning and execution to maintain customer trust and service quality throughout the digital transformation process.
Traditional banking architectures often struggle to provide the responsiveness and real-time capability digital experiences are expected to deliver, quickly destroying customer trust as well as satisfaction. Older batch-based architectures often simply can’t provide what’s needed – even poll based synchronous APIs can struggle. Companies need to prioritise a customer-centric approach, ensuring customers do not feel neglected during this transition, especially as the financial sector is facing a rapid transformational period.
Both organisational and application responsiveness will be crucial for banks moving to a fully digital presence as it’s pivotal in maintaining customer trust. People need to experience constant engagement with their chosen bank, even if this is through AI chatbots, which are able to provide personalised services. CRMs, chatbots, and automated marketing technologies are crucial for gaining valuable customer insights, but data from all these separate systems must then be made available within the digital experience to provide a full view of what customers expect.
With the closure of physical branches, how can banks ensure that customers who are less tech-savvy or resistant to online banking are not left behind?
To ensure that less tech-savvy customers or those resistant to online banking are not left behind, banks can leverage emerging technologies and hybrid strategies. Advances in Generative AI, such as Retrieval-Augmented Generation (RAG) and agentic AI, offer the potential to create more intuitive and personalised customer interactions. By equipping these AI systems with up-to-date and comprehensive information from multiple sources, banks could provide a user-friendly experience that bridges the gap for individuals unfamiliar with traditional online banking interfaces.
However, as these technologies are still evolving, banks should proceed cautiously and continue to refine them to effectively address customer needs. Additionally, some institutions, like Nationwide, will continue to reimagine the role of physical branches as a unique value proposition. By maintaining a physical presence as a premium service, they cater to customers who prioritise in-person interactions, providing an alternative for those unwilling or unable to embrace digital banking fully. Ultimately, the balance between technological advancements and physical presence will depend on customer preferences and the pace of innovation in AI.
Could you elaborate on how event-driven integration specifically addresses issues like transaction delays and disruptions in a high-volume digital banking environment?
Event-driven integration is inherently asynchronous, which in a banking environment translates to responsiveness. Requests can be responded to even when background processing is very slow, immediate updates are created as progress is made – while non-essential functions can be removed from the critical path, allowing faster responses. Transactions can then be acted on later, safe in the knowledge that any failing parts of the transaction will be executed at some point. This means changes can be processed and dealt with as it happens, rather than expecting the user to wait for the whole process to be completed.
Compared to traditional batch or even synchronous APIs, this approach allows applications to instantly react to specific events such as a customer payment initiation. This then allows for dynamic and agile infrastructures that dramatically enhance transactional efficiency, reduce latency, and deliver a smoother, more immediate digital experience across online and mobile platforms. In a high-volume environment, this technology is highly scalable, allowing faster responses to changing customer needs.
How do traditional banking architectures compare to modern event-driven systems in terms of scalability and reliability for handling digital transactions?
Traditional banking architectures often struggle with scalability due to their reliance on periodic updates and batch processing. As transaction volumes increase, these systems may face performance challenges that require substantial infrastructure investments to overcome. In contrast, modern event-driven systems (EDAs) offer significant advantages in handling digital transactions. By processing events in real time, EDAs provide enhanced flexibility and scalability, ensuring that systems can efficiently adapt to fluctuating transaction volumes.
The adoption of cloud technologies further amplifies this capability through cloud elasticity, enabling banks to dynamically adjust resources to match customer demands. This combination of real-time processing and resource agility gives event-driven systems a competitive edge, allowing banks to deliver seamless and reliable digital experiences that meet modern customer expectations.
What lessons can traditional banks learn from challenger banks in providing a seamless and speedy digital banking experience?
Challengers usually don’t have legacy technology, so they have the advantage of being able to choose the experience they want and can build the technology that provides the best fit. Often traditional institutions look at what they already have and see what they can improve, selecting the experience to best match their technology. This often does not provide the engagement the customer desires.
Traditional financial institutions should adopt event-driven integration as a strategic approach to balance their technological landscape. This strategic move will result in them being much more agile, reducing coupling between legacy and newer systems. Event-driven architecture provides better responsiveness, processing as needed and updating both user interfaces and customers immediately. Events also offers the ability to access data across systems, geographies and environments via the use of a connected event mesh.
This combination of capabilities can serve as a crucial bridge, enabling seamless connectivity between established legacy systems and cutting-edge applications. By implementing this strategy, traditional banks can effectively leverage the strengths of both legacy and modern infrastructure, to deliver desired customer interactions.
As banks become increasingly digital, what technologies or strategies should they prioritise to ensure they stay competitive and meet evolving customer expectations?
Today’s challenger is tomorrow’s legacy, so all banks must consider how legacy tech can be harnessed for future requirements. The key to this is integration – by keeping the system interfaces agile, prioritising integration as a top-level concern and not an afterthought. It is also important to prioritise the people when making this digital transition, both customers and employees – considering their motivations and needs, and the effects of the technological transition.
By focusing on these strategies, banks can create a competitive edge, improve operational efficiency, and deliver superior customer experiences in the digital age.