FREMONT, CA: According to a report by Gartner, 25 percent of retail banks will use startup providers to replace legacy online and mobile banking systems by the end of 2019.

Banks are facing tremendous pressure to increase efficiencies and reduce costs while delivering digital services to customers but according to the Gartner report titled "Market Guide for Open Unified Digital Banking Platforms,” incumbent application vendors have reacted irresponsibly and slow to this.

New vendors are emerging to provide channel integration and customer experiences to meet the needs of customers and banks, making it easier for customers to realize banking on devices they choose to use. It is these vendors that pose a challenge to the incumbent vendors of legacy online and mobile banking systems.

These new vendors have emerged with digital banking capabilities that allow bank business and IT staff to tender apps and applications that provide personalized, customer-centric banking experiences.  They also offer data and behavioral analysis, location and context sensitivity and conception of a partnership ecosystem to create new services leveraging partner data, transactions, and processes.

Digital banking platforms may comprise of a broad range of capabilities including financial management, payments, marketing, loyalty, analytics, and customer communication management.

Gartner perceives open unified digital banking platforms as an emerging technology, even though some banks have been providing these same services for a long time.

Open unified digital banking solutions deliver new digital products and services, and creates a multidimensional customer experience across all devices and channels. They enable banks to develop and deliver services for use by both bank staff and customers, via any gadget or channel.

The market for digital banking platforms is highly fragmented. Vendors include: Incumbent bank niche vendors; Mobile or online banking solution vendors; Horizontal digital platform and customer experience vendors; Horizontal portal vendors; System integrators; Emerging digital banking vendors; and Startup digital banking vendors.

"Startups and emerging providers of digital banking platforms offer banks interesting opportunities for innovation," says Stessa Cohen, research director at Gartner. "However, CIOs must prepare to manage the challenges of evaluating and selecting new vendors that may not have proven track records in the financial services vertical or may simply be new and untried without an extensive customer base. It can be difficult for CIOs to justify investment in their solutions to their boards and regulatory agencies, but don't use that as a reason to exclude new vendors."