Banks Challenger Banks Editor's Choice Europe Exclusive Content

Atos: How Legacy Banks Can Thrive in a Digital World

It has been imperative for incumbent banks to digitise in order to keep up with the new competition, namely challenger banks. Traditional banks face a projected loss of $2trillion if they do not adapt to the new digital climate, meaning that no operational aspect should be exempt from a digital audit to ascertain how and what can be improved to at least keep pace, if not stay ahead of the fleet-footed competition. Total transformation is needed – if banks do not completely commit to digital change they will not survive the impact of neo and challenger banks.

Atos provides secure and decarbonised digital with a range of market-leading digital solutions along with consultancy services, digital security and decarbonisation offerings; an end-to-end partnership approach.

Here, Kuldip Chiheru, Digital Banking Platforms expert at Atos – trusted digital partner to a number of the world’s leading banks and insurers – explains how legacy banks can thrive in a fast-moving digital world:

Kuldip Chiheru, Digital Banking Platforms expert at Atos
Kuldip Chiheru, Digital Banking Platforms expert at Atos

The Challenge for Legacy

Over the past few decades, we have seen an incredible shift in the banking industry as technology has brought with it the opportunity to digitise every operational element. For traditional banks, this shift has presented tremendous opportunities along with significant challenges.

New technology has heralded an era of both neo banks – digital-only banks – as well as challenger banks, recently created institutions with a largely digital footprint. Together they have gained over 39 million customers worldwide in the last 10 years.

Research suggests that customers are attracted to the high-quality user experience of new challenger banks – a 2021 survey found that for 81% of consumers, the prospect of easy access and flexible banking would convince them to switch to a new-age financial provider.

Neo banks are also performing well behind the scenes; their keen cost-income ratios present a significant threat to established institutions. Additionally, they are less likely to be the target of cyber-attacks – a threat that companies in the financial sector are 300 times more likely to face than others.

According to recent research by Citibank, the strengths of these new digital banks are part of the reason the traditional banking industry faces a projected $2trillion revenue loss by 2025.

Of course,  legacy banks have always been aware of the need to keep abreast of technological changes: as early as 1994, the first US bank offered internet banking to all of its customers. But the pace of change is only increasing, and a hybrid of digital and traditional will increasingly expose banks to a lack of agility, scalability as well as operational fluidity,  leading to the risk of dissatisfied customers when compared to fully digital and more nimble competitors.

To retain their competitive edge, banks must embrace deep digital transformation, meaning that no operational aspect should be exempt from a digital audit to ascertain how and what can be improved to at least keep pace, if not stay ahead of the fleet-footed competition.

A best of breed banking model

As part of this transformation it is imperative that banks move to an open source software and API model, which allows a fast adoption of new partners and services into the bank, using very lean operating costs. For example, Atos use a ‘hyper-agile, software defined banking business model’.

The core elements of this kind of model ensure legacy banks can stay ahead of rapidly evolving technology for decades to come.

One component of the model is ‘best of breed’ banking which means working with partners who are leaders in their fields to operate each area of the bank resulting in bank that is created by true specialists.

Using multiple partners creates a ‘digital ecosystem’ relying on the simple and secure exchange of information, so that every operational aspect of a bank is connected to the whole and underpinned by data analytics enabling an agile approach. This is where the use of open source software code and open Application Programming Interfaces (APIs) comes to the fore.

APIs are the interface which facilitate the exchange of data between partners. These ‘middlemen’ of data exchange allow the hundreds of applications in a single open bank to communicate seamlessly.

The open source software used for collaboration has additional benefits. Developers can quickly build applications and services around the bank, enhancing its offer. For example, banks will increasingly be able to build new services using data across partners and institutions. Open collaboration also lets customers share their banking data more easily and securely.

Total transformation in practice

Banque Misr, one of the largest banks in Egypt, is set to become the country’s first fully digital bank and a prime example of a transformative banking business model in practice.

Partnering with Atos and embracing a software-defined infrastructure, the bank will build a new front to back digital bank to be named ‘MDI Digital Bank’.

Using an open banking ecosystem means that partners and external services will be able to deliver products to customers as they are developed. Bank customers should receive a personalised and frictionless digital experience across all channels. For example, MDI will harness advanced AI using big data management to give customers practical insights tailored to their financial needs and lifestyle.

Other digital services will support MDI in its marketing and outreach. Solutions such as social customer relationship management will foster a richer engagement with customers and prospects.

Overall, MDI will deliver an engaging digital banking experience to customers, supporting the ambition of Banque Misr to appeal to a new demographic and with a unique set of digital products and services.

The Future for Legacy Banks

While the banking industry’s digital journey is well underway, total and not partial transformation is imperative in order to survive the impact of neo and challenger banks. This approach alongside a mindset of constant evolution will safeguard excellent customer experience, exemplary business operations and long-term growth. Banks that embrace this philosophy are set for a bright future.


  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

Related posts

UK Fintech News Roundup: The Latest Stories 12/10

Tom Bleach

What the Age of AI Means for Wall Street

Jason Williams

Rize: Compliance Do’s and Don’ts for a Fintech Startup

The Fintech Times