The pressure to digitize is increasing, especially in the financial industry, where low-interest rates and changing customer needs have made banks less competitive. VP Bank Liechtenstein is reportedly considering outsourcing its IT department. Is this the right way forward?
Banking is at a turning point in many ways. The most significant disruption comes from digitalization and automation: Fintechs, neobanks, cryptocurrencies – the traditional banking model has come under attack from many different sides. That’s why it’s more important than ever before that banks start cooperating with technology companies to prepare for what’s coming next.
That’s also the case in Liechtenstein. Although Liechtenstein’s banking landscape is more advanced in Fintech, and the government is actively pushing Fintech innovation, banks still need to speed up their efforts.
Outsourcing to external IT-providers
According to the financial news blog, Inside Paradeplatz, the Liechetnsteiner VP bank is currently considering outsourcing its IT department. Paradeplatz quotes an “Insider” who claims the project is already in an advanced stage and Swisscom or Inventx are potential IT partners. The final decision could already be made in December.
The bank itself has not confirmed such rumors. According to the bank, “our future IT-platform is a key part of our strategy 2026, which will be the basis for the development of our future financial services.”
The bank, however, confirms that it is currently looking at different ways to outsource its IT department. “The reason is the potential cost-savings. Today’s technological trends require that sourcing, and in particular, Cloud Solutions are part of our strategic considerations,” says the bank. “When testing different potential providers and their offerings, we compare those with our strategic and revenue goals, to create a comprehensive basis for our strategic decision-making.”
What precisely the strategic considerations of VP bank are is currently not clear. However, that banks need to improve their IT infrastructure is not a secret. Working with specialized external providers can give banks an edge. The bank can then focus on what they can do best – providing financial services – and the IT provider takes care of the technological infrastructure.
Software-as-a-Service for financial services
Another way for banks to improve their infrastructure without outsourcing their entire IT department is by using different Software-as-a-Service suites. Especially around Liechtenstein and Switzerland, a significant number of startups have developed cutting-edge SaaS solutions for banking applications such as wealth management, payments, lending, and pretty much every part of the banking business model.
Following a best-in-class approach, banks could choose the best SaaS provider for their services. That also allows the bank to switch to a more digital offering step-by-step without taking the risks of outsourcing their entire IT, which would make the bank dependent on external service providers.
There is no doubt that digitalization is inevitable for any bank that wants to remain competitive. The way how banks should digitize, however, is up for discussion. The developments at VP bank will be interesting to watch as there will be lessons to be learned for other banks a well.