Digital Transformation in Banking - my POV

The digital banking landscape has never been more dynamic than it is today. 

The number of people going into branches to do their banking is falling dramatically. Customers are changing the way they bank, which requires banks to be flexible and agile.

A lot has changed about today’s customers. In this digitally connected world, customers search, learn, communicate and shop with technology. Easy access to abundant information, web connectivity & smart phones which are key characteristics of the digital age, may have impact on customer loyalty. 

On top of that new competitors & new technologies are impacting the banking industry faster and to a more significant degree than ever experienced.

With rising pressure from agile digital competitors, whether fintech startups

like Sofi, Billguard, Wealthfront and Moven, or larger entrants like Apple, Microsoft, and Google, every financial services organization must think like a tech company.

Today’s banks are facing various head winds that require shift to digital:

• Channel overload – mobile, online, branch, ATM
• Growth required – competition from non traditional players
• Budgets are allocated to risk and compliance

Banks are introducing digital financial advisers called Robo Advisers, which helps customers to make more informed savings and investment choices.

Recent analysis shows that over the next five years, more than two-thirds of banking customers are likely to be “self-directed” and highly adapted to the online world.

Consumers already take great advantage of digital technologies in other industries like booking flights and holidays, buying books and music, and increasingly shopping for groceries and other goods via digital channels.

Banks are using fintech companies to co-develop new services that meet their business needs in areas such as money management, payments, lending and mobile on-boarding.

There are several challenges in digital transformation:

• Data quality as it is coming from disparate sources
• explosion of Big data sources like social, audio, video, beacons data
• Lack of data integration across various lines of business
• Resource shortage to develop and maintain digital solutions

Some of the trends in Digital Transformation:

•  A Blockchain based payment system
• Increased focus on data science – machine learning, Artificial Intelligence
• Lending industry consolidation

How to start this digital journey:

• Understand and assess what customers, partners, employees and other stakeholders want.
• Map the customer journey for each touch point.
• Analyze the quality of experience and identify the challenges to be resolved.
• Prioritize and deploy social, mobile, analytics, cloud, IoT as necessary.
• Test and move fast on failures to new innovations or business models

Banks must focus on humanizing the digital relationship, not digitizing the human relationship. They should use any technology or innovations which has to ultimately benefit the consumer.