Part of our Banking, Financial Services, and Insurance Series
As the use of smartphones and the popularity of online applications continue to grow, more opportunities emerge for the digital banking market . From a spike in client population joining the digital banking community to more and more government initiatives supporting digital bank growth, banks across the globe are discovering more value in offering more digital services online.
However, many small to medium-sized banks – particularly those with a traditional business model (operating largely offline) – are falling behind neo banks and fintechs who have been serving the digital market for much longer and are already digitally mature . This can be attributed to the competition’s greater ability to focus on advanced customer-facing tech integrations . Fortunately, banks have a secret weapon – digital service augmentation partners that can become their competitive edge.
In this article, you will learn:
- Why traditional banks are struggling to compete with neo banks and fintechs in the digital space
- The implications of such a challenge
- How you can solve enveloped issues and get ahead of the competition with augmentation
Arguably, competing neo banks and firms in adjacent industries such as fintechs have the advantage of being “digital-only” and being able to allocate all their digital development resources to advanced digital initiatives. Having laid their digital foundations at the onset, the majority are now enjoying the benefits of being the pioneers in the digital financial sector . On the other hand, traditional banks are still largely dealing with technical debt, with the majority of their efforts still focused on migrating legacy systems and digitising core services. That being said, many of them are finding it difficult to compete in the digital space with neo banks and fintechs due to lack of manpower.
But what exactly does this limitation mean to traditional banks? Beyond the challenge of limited manpower itself, banks are facing the threat of losing their clientele and prospects to the competitors before even being able to provide customers with similar digital services . Companies such as Amazon, Apple, and Google dominate the market with their ultramodern data infrastructures and digital offerings of mobile wallet cards and state-of-the-art apps . And although banks are slowly starting to realise partnerships with fintechs to get in on their success3, full revenue will always trump partner commissions.
How your business can stay in the ranks despite limited digital development teams
Despite the initial manpower advantage of digital-only competitors, traditional banks can continue to compete and even overtake neo banks and fintechs. How? By leveraging the expertise and manpower of external digital partners. How your business can stay in the ranks despite limited digital development teams
Resource augmentation partnerships can be a very powerful and yet attainable edge. Apart from their ability to fill in gaps within your native team’s skillsets, these partnerships can also add strength and focus to your current digital strategies from an expert point of view. Furthermore, partners can develop entirely new services and products for you – with or without you having to free up more of your already occupied employees, resource augmentation. And these are just a few items in the long list of how augmentation can provide unique value to traditional banks.
Improving focus and speeding up development
Among the best deployable advantages of these collaborations that work to the interest of traditional banks with occupied manpower are the focus on and catalysed speed of building digital initiatives. With the ability to employ and augment as many digital development resources as companies need and want, any organisation can easily fast-track and prioritise digital initiatives regardless of internal resource size. And what does this imply? Instead of constantly adjusting and delaying growth due to the constraints of manpower, goals can then be set and achieved according to your timeline.
Broadening digital competencies
Extending digital capabilities is another benefit that augmentation services can provide. By leveraging the advanced technical skills and mastery of an expansive tech stack of digital development partners, banks will be able to dramatically increase the functionality of each digital asset. Additionally, when native and augmented resources work together, there are opportunities for internal resources to learn from the skills of the external team or resource. This allows simultaneous upskilling and fortification of internal digital teams.
Maximising cyberspace expertise
This team extension model also allows traditional banks to leverage advanced digital expert insights. By employing experts in the digital field, banks can have access to state-of-the-art solutions and strategies, as well as a more accurate and developed understanding of the digital space. More often than not, digitisation partners grow adept in new technologies faster due to the nature of their business and have a better grasp of the digital market and industry outlook . Not to mention the better-guaranteed quality of their work under an output-based partnership with identified tangible results .
Resource augmentation with Monstarlab’s Digital Factory service could be the ideal solution for organisations who want to accelerate their digital transformation. Especially for those hindered by low digital capability or capacity. Employing the following steps effectively can catapult your business to harness the power of technology and set up a stronger digital future.
Map out your goals
Identifying what you want to achieve with digital before diving into your search for a partner will help your organisation align its efforts and achieve consistency. Starting with your long term goals and working backwards to your annual, monthly, and down to your current targets can help you navigate the bigger picture while also paying better attention to details you can apply to build your digital strategy.
Put a holistic strategy together
With your organisation’s digital goals and current resources in mind, drafting a complete end-to-end strategy can help you select better solutions that create more tangible and aligned results. If you’re having trouble envisioning what that comprehensive digital strategy would look like, this is where collaborating with a resource augmentation partner could start to create value.
At Monstarlab, we operate our augmentation service called Digital Factory based on the following strategy:
Source: “Accelerate digital transformation underpinned by nationalisation with Monstarlab’s Digital Factory” by Jackie du Plooy 
For reference, our approach leverages the following key building blocks; rapid delivery of digital products to mass-market , building sustainable internal capability, and establishing digital DNA and culture for and within the organisation, to facilitate long-term and continuous benefits .
Find a partner capable of delivering quality at desired speed and cultivating your growth
Though the augmentation itself offers numerous benefits and rewards, who you end up working with may not. Before choosing your partner, consider their successful work history, scope of capabilities, talent pool quality, as well as the relationship you can develop with them. Partners who will help you achieve success while imparting industry knowledge and skills that promote your growth can offer you more than those who simply work under a contract.
In hindsight, augmentation partnerships can be the secret weapon your business can wield in the digital battle over the new banking population. Not to mention its ability to create accelerated but long-term impact on your business and digital team’s growth. However, it is most important to remember that the quality of the partnership you choose to employ is determinant to augmentation success. That being said, in addition to better understanding and managing your organisation, being mindful in your search for a digital partner is also key to successfully leveraging the power of augmentation.
Jackie Du Plooy (AE) | Building Internal Digital Excellence
20+ years experience in digital transformation, digital strategy & Innovation and commercial management across multiple Industries, incl BFSI and in multiple countries (South Africa, Namibia, London, Wales, Singapore, Dubai) in the role of Client Partner.
Focus has been on building high performing teams, sound strategic partnerships, by bringing together delivery and commercial teams to drive the customer strategy and journeys of digital transformation.
Read more about banking, financial services, and insurance here
 Research Dive, “Digital Banking Market Report”, 2020
 The Conversation Media Group, “Traditional banks are struggling to stave off the fintech revolution”, 2019
 Toptal Finance, “Fintech and Banks: How Can the Banking Industry Respond to the Threat of Disruption?”, n.d.
 Ubiminds, “What is IT Staff Augmentation, what it means for your business, and how it can work for you”, 2021
 Tunga, “IT Staff Augmentation 2021 report: a comprehensive overview”, 2021
 Code 23, “Software Development Agencies Vs In-house Dev Teams”, n.d.
 du Plooy, j., “Accelerate digital transformation underpinned by nationalisation with Monstarlab’s Digital Factory”, 2021