The Challenge of Underutilization in Banking Technology
One of the most common pitfalls in developing a digital strategy for banks is underutilizing existing technology and vendor capabilities. Too often, banks purchase “point solutions” from vendors—single-purpose tools designed to solve a specific problem at that moment. While these tools may address immediate needs, banks rarely take a step back to assess whether their existing vendors and platforms could solve the same challenges, often leading to missed opportunities and bloated tech stacks.
The Problem: Trying to Do It All
For most community banks, the root of the issue lies in trying to manage too many lines of business under one roof. Many institutions take the approach that, to best serve both consumer and commercial clients, they need to offer everything to everyone. This mindset leads to banks simultaneously managing multiple financial products—commercial loans, treasury services, interest rate derivatives, foreign exchange, consumer loans, mortgages, HELOCs, and auto loans—each with its own set of processes, technology needs, and compliance demands.
The result? Banks end up running eight to ten distinct businesses under the same umbrella. Each product line requires its own technology tools, creating overlapping systems and fragmented processes. This complexity makes it challenging to fully utilize existing technology and vendor relationships, as tools often go untouched or underused across different lines of business.
The Impact: Bloated Stacks and Stretched Teams
When banks try to deliver so many products simultaneously, the impacts become clear:
Service delivery can suffer as teams work in silos, with limited visibility across products and platforms. Compliance also becomes harder to manage since each line of business introduces unique regulatory requirements. But most critically, in the context of digital strategy, the impact shows up in bloated technology stacks. Banks accumulate layers of point solutions—often paying for redundant tools while failing to maximize the capabilities of the platforms they already have.
The strain isn’t just technological; it affects people too. With so many projects in play, internal teams often find themselves stretched thin, juggling multiple implementations and vendor relationships. This resource drain slows progress and can create operational inefficiencies that ripple across the entire organization.
Lessons Learned: Rethinking How Banks Approach Technology
Over time, a few key lessons have emerged when it comes to solving the underutilization challenge:
Evaluate What You Already Have
Before considering any new technology initiative, assess your current vendor landscape. Many community banks work with 20, 30, or even more vendors, often with overlapping products. Review your existing capabilities carefully to see if the solutions you need are already available.
Explore Enhancements Before Replacements
If your current vendors can’t fully solve the problem, the next step is to explore whether they offer product enhancements or feature add-ons. Many vendors provide software extensions or modular upgrades that could meet your needs without requiring a complete platform switch.
Pursue New Vendors Only When Necessary
If neither of the above resolves the issue, it may be time to explore external solutions. However, be cautious—many new vendors have expanded their product offerings, leading to even more feature overlap. Be sure to evaluate potential redundancies before adding another vendor to your stack.
Actionable Advice: Steps to Maximize Technology Utilization
From personal experience, here are a few actionable strategies to start getting more value from your existing technology investments:
Enhance Existing Tools
Don’t be afraid to enhance or customize your current platforms. Many banking technology providers now offer Software Development Kits (SDKs) that allow banks to add functionality to existing systems without the need for entirely new solutions or the associated costs.
Have Open Conversations with Vendors
Engage directly with your vendors. Many are actively looking for ways to expand their capabilities and will often collaborate to build solutions tailored to your bank’s needs, especially when it aligns with their own product expansion strategies.
Create a Dedicated Role for Tech Optimization
Consider establishing a dedicated role or team responsible for maximizing the use of your technology stack. This role should focus on technology utilization and vendor management, ensuring you fully leverage your tools while aligning spend with business outcomes.
Final Thoughts: Getting More from What You Already Have
Technology underutilization remains one of the most overlooked challenges in community banking, but it’s also one of the most solvable. By taking a more strategic approach to evaluating and using existing tools, banks can reduce costs, simplify operations, and improve service delivery.
The key is to avoid the temptation to solve every challenge with new technology. Instead, focus on maximizing the potential of the platforms and partnerships you already have. With the right mindset and a clearer view of your existing capabilities, your bank can transform its technology investments into powerful tools for growth and efficiency.
About Finov8r
Finov8r is a leading embedded advisory consultancy that supports banks, fintechs, and corporations. Bridging finance and technology, Finov8r provides tailored solutions that foster profitable growth, simplify technology complexities, and deliver 5x ROI through fintech innovations. With hands-on advisory, Finov8r works within teams to achieve long-term results, unlock new revenue streams, and modernize operations. For more information, visit finov8r.com and follow on LinkedIn.
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Bank executive, fintech founder or business owner and want to get in touch regarding Finov8r advisory? Email me at allan@finov8r.com.
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