Banking 2020: Building a Truly Digital Bank

Ritesh Varma

Innovation has brought before us newer technologies waiting to be explored and applied. It’s time to evaluate where your bank stands in the application of technology, how far you must go, and how far you can potentially go.

Are you there yet?

New Bank Branch Models

Research by Accenture suggests, “In the US: 81% of respondents said that if their local branch closed its doors they would not switch provider. But to remain relevant, bank branches will have to become part of the digital experience – banks will need to invest in in-branch digital tools that deliver new and immersive customer experiences.”

Ritesh Varma

Also, banks like Argentinian Banco Galicia and Pinnacle Financial Partners have come up with a concept of “coffee banking” branches. Wherein, these banks have partnered with Starbucks to offer banking services and the experience of a coffee shop together, allowing them to expand their reach and attract millennials.

Social Media is the Preferred Interaction Platform

According to a report, “One in three social media users prefer to connect with a brand on social media for customer service, and 63% expect companies to offer customer service on social media.”

Today, digital customers prefer social media as their interaction platform. Considering this, banks need to focus on their social media strategy and leverage the channel to tap various opportunities.

Customers are Adopting Mobile Wallets Faster than Banks

Mobile wallets have already been widely accepted. However, banks have been slow to tap into the potential of mobile wallets.

According to Vipera, “In China, digital wallets have been quicker to integrate broader ranges of features, and acceptance has exploded. With 76% of metropolitan consumers using digital wallets regularly, versus just 36% in the US. The figures should act as a wakeup call for Western (European and U.S.) banks, particularly with PSD2 and its incentives to join the open banking revolution.”

Robots and Artificial Intelligence (AI)are Invading Newer Avenues

According to a report by the Financial Stability Board, “AI and machine learning are already being applied in the front office of financial institutions. Large-scale client data are fed into new algorithms to assess credit quality and thus to price loan contracts.”

However, banks can extend robots and AI to other areas of banking such as regulatory compliance, asset management, risk management, credit scoring and more.

Open Banking is the Next Big Thing

Increasing customer expectations require banks to continuously innovate and deliver best-in-class digital customer experience. However, as digital ecosystems evolve into innovative operating models they begin to collide. And, if they are unable to share information between themselves, it results in critical loss of innovation. Thus, open banking and open APIs are crucial. Without interoperability and open banking, banks would not be able to access valuable innovations, which can directly benefit them and their customers.

Banks may have incorporated these trends, but for many of these banks, digital transformation remains elusive!

Building a Truly Digital Bank

What is a ‘truly digital bank’?It is a bank that has its departments and systems firmly tied together, for both speed and efficiency. Its foundations are agile and adapt to changing market and customer demands. But most importantly, it’s a customer-centric bank! Let’s discuss these key elements in detail.

  • Connecting Processes for Efficiencies

A broken process cannot deliver a great customer experience. Siloed and manual processes continue to hamper digital transformation efforts, delivering delayed and substandard customer experiences. To deliver a seamless customer experience and derive maximum value out of the latest technology trends, it’s imperative for your bank to operate as a connected enterprise.

One way of addressing the broken process experience is by looking at the set of applications across the organization and rationalizing it. Many of these applications are replaceable with a more standard and consistent set of applications, which can easily integrate with a process orchestration layer.

  • Developing an Agile Organization

New technologies and entrants are reshaping banking with innovative business models. This requires banks to adapt to changes quickly and effectively.

However, banks have multiple legacy systems and subsystems. Most of these are redundant systems due to inflexibility and limited scalability associated with these applications and point solutions. A scalable, low code and robust process platform is what is needed.

  • Building a Customer-Centric Brand

A clever branding strategy is one that leverages every interaction with the customer to define the brand. To achieve this, it is important to know your customers’ preferences.

‘Connect’ is key. Customers and prospects like being remembered. If a customer holds an account with your bank in any of the businesses, it helps to pre-fill the information and to help them along with the right decision based on the context.

A customer-centric organization relies on the orchestration of workflow, structured data and unstructured content, and integration with sources of record. Further, you need to integrate the experience across channels – social, mobile, web, or even at the branch. All the interactions, throughout the customer lifecycle, must be treated as a single unified experience across channels.

Time is an Illusion, Timing Is an Art!

Innovation will continue to usher in new technologies and the potential for digital disruption. Going ‘digital’ will mean embracing change. Banks will need to step out of their state of inertia and quit the ‘just because it’s not broken, it shouldn’t be fixed’ ideology. Because, these technologies will be useful to your bank, just as they will be useful to your competitors. Therefore, it is not merely about adapting to these, it is about adapting fast to gain a competitive edge.

The key to mastering the art of ‘digital’ is mastering the art of timing!

Views shared in this article are the personal opinion of Ritesh Varma, Global Head – Business Solutions, Newgen Software.

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