With these Forrester Wave evaluations, we separated off-the-shelf banking back ends for retail and corporate banking for the first time. However, this was not the only first: We also introduced a new banking software category: the digital banking processing platform (DBPP) — the back end for digital banking that comprises the lean and the digital core. Forrester defines a DBPP as a comprehensive but modular/componentized set of banking applications designed to cover areas like retail and corporate banking. DBPPs comprise core banking functions and support processes in near real time, provide insightful information, allow rapid product development, and expose business capabilities via APIs.
However, this is only the starting point for what I want to talk about today; I intend to talk about something as “boring” as off-the-shelf (OTS) banking functionality delivered by banking solutions and particularly DBPPs. Let’s look at those incumbent vendors with DBPPs that offer broad and rich OTS banking capabilities. During the Wave evaluation, we found functional enhancements and extensions in their roadmap but hardly any entirely new business capabilities. I guess this is no surprise: There are only so many ways to onboard a customer and use a deposit account or a complete trade finance system. The differences start to become subtle and are only visible at a very detailed level.
At the same time, “young” DBPP vendors or vendors with “young DBPP” solutions are trying to match the functional breadth and depth of leading incumbents. They either use their own resources to enhance their OTS capabilities or leverage partnerships and banking application ecosystems to accelerate this multiyear journey. In parallel, the incumbents seemed to have slowed down the delivery of truly new OTS banking capabilities.
If this development continues, OTS banking functionality will stop being a differentiating DBPP capability. And technology teams in banks will stop considering OTS banking functionality as a criterion to define long- and shortlists in selection processes. They will use demo workshops to evaluate how a DBPP delivers its OTS banking functionality but not so much which functionality a DBPP can deliver.
As soon as this happens, only the vendors that haven’t neglected technology and architecture will be positioned for success. These vendors have cloud-native DBPPs — as opposed to DBPPs that can run in the cloud. These DBPPs build on true microservices — as opposed to a kind of functional fragmentation on top of a monolithic database. The bottom line: Those vendors that believe that their broad and deep banking functionality will ensure their DBPP a place on a shortlist forever need to rethink and accelerate. Digital banking has not only reached the banking industry but also the banking software industry.
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