This is why digitization in banking is essential
Due to continuous digitalization, technology advances and this provides us with new tools that accelerate and optimize our work processes. Adoption of digitalization is very important for the banking sector and it has become increasingly exposed to the strong pressure of change, attributed by the global pandemic. As a result, many industries are forced to go digital and work faster towards a digital culture. So, what does this mean for banks?
This sort of digital transformation in banking means understanding customer wants and needs and investing in those wants and needs. Achieving this means mapping the customer journey and building tools and applications around it, with a focus on specific critical points.
What is digitalization in the banking industry?
Digitalization in banking largely entails the shift to offering online and digital services, as well as the massive number of backend changes required to support this transformation. This is a big initial investment, but it will save you money in the long run as it improves customer satisfaction, frees up staff for value-added activities such as relationship building, and eventually saves time by automating processes.
For example, a digitized customer journey allows a customer to click on an ad, sign up for an account online, receive tutorials and on-boarding information through their app, receive automated loan decisions, and pay bills or send funds online.
Examples of Digital Transformation in Banking:
- Blockchain Technology
- Utilizing Artificial Intelligence (AI)
- Customer Data Collection, Management & Analysis
Banks particularly rely on new technologies, such as artificial intelligence (AI) and blockchain. These should ensure that the benefits of digitalization will also be reflected in bank profitability.
The more digital services banks offer, the more data they have. With this data, banks can identify opportunities, optimize products and services, and automate solutions. More specifically, they are able to personalize certain points along the customer journey. Additionally, technology such as AI and Blockchain can make certain processes simpler and quicker for customers to go through. This in turn enhances the customer experience and builds customer loyalty.
benefits of digitization in banking:
- Better decisions based on data. Having more digital services offers clearer insight in customer demand, which can improve decision making and accelerate growth.
- Better user experience. Financial institutions will be able to cater to every want and need of the user by personalizing the customer experience based on collected data. This fosters loyalty and thus increases customer retention.
- More clients. The emergence of Fintech and competition has brought more consumers to the financial sector.
- Processes are quicker and more efficient. The use of AI and ML will speed up processes through automation, adding more value to the user experience.
- Cost reduction. Developing efficiency through automation will allow banks to cut operational costs.
How to transition to a digital model – it cannot be done overnight:
Bank digital transformation is easier said than done. With reasons ranging from a lack of consistency or support across new digital applications to lacking internal agility. We will help you in the right direction with these tips.
- Find and implement a ‘plug-and-play’ security solution.
- Come up with an authentication plan – secure it using either SSO or MFA.
- Compatibility and Accessibility – Any device, anywhere, remotely.
- Cyber awareness training amongst employees – Educate on insider threats, phishing, clicking on emails, sending data to the wrong recipient, etc.
- Be able to send documents online (employee to employee and employee to client)
- Analyze your process, audit it and monitor.
True digitalization starts from within, fostering a digital culture that extends throughout the entire organization and translates into meaningful change over time. Banks can continue their digital transformation by changing approach, replacing legacy frameworks, and working to develop a digital culture internally before focusing on the development of single-use digital features. Once the digital culture is achieved, digital platforms and services can offer a great deal of value to consumers, especially when supported by automation, AI, big data, and blockchain technologies.