Covid-19 has been a proven catalyst in the adoption of new technology, ramping up the speed through which no one could have had anticipated. This shift was smoother for the already tech-savvy populations such as millennials, Gen-Z, Gen-Alpha, and others who had reluctantly followed. The global pandemic triggered masses to opt-in for digital interactions out of necessity. The organizations which have had already laid a foundation of digitization, have added more value-technology to the work-stream. And the organizations which followed apprehensively are exposed to the gaps they need to bridge quickly to stay abreast of the technological advancement.
In the wake of the global pandemic, the banking industry has gone through prodigious digital changes. Financial institutions are rapidly adjusting to serve digitally and securely. Right from restrictive working hours at physical branches to banking digitally handling the massive online workload. Digital disruption in the banking industry is a byproduct of the demand in the customer expectations of a smooth journey across the touchpoints and supply of the technology advancements. Growing digital adoption, maturing customer expectations and improving financial awareness among rural population, conjugated with favourable regulatory frameworks, are providing strong transformation impetus to the Indian BFSI sector.
Fintech’s and big techs have streamlined the digital transformations for banks and the banking industry as they provided technologies that reduce friction in daily routine. Partnering with fintech will help organizations in the future as fintech firms are agile in their operational efficiency as they are not operating on legacy technologies. According to IDC, bank spending on consumer-facing technologies for branches and online services is forecast to grow; increasing from $31 billion in 2020 to $40 billion in 2024.The focus on niche technologies will help organizations to accommodate ever-changing transformation innovation. Growing investments in digitization, specifically AI, will play a key role in transforming the legacy systems and accelerating the shift towards BFSI models of the future.
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Financial institutions have seen paradigm shifts in customers opting in digital payments wallets, digital monetary transactions, and many other utilities. Cognitive intelligence has been the ideal technology to handle big data, predictive models have personalized the user experience to some extent. Open banking has enabled many customer-centric applications for the betterment of customer touchpoints throughout the processes. This transition in the banking sector has brought down the intermediary cost significantly. An increasing number of consumers are using online banking channels which is likely to result in a more permanent shift in customer preferences to digital channels and an increased demand for digital services in banking industry. Building confidence in the digital journey will be necessary as paving its way forward. As online frauds, any pin attacks, cyberattacks have also been on the rise.
The banking industry is reframing to achieve more customer-centric models. With the advent of new technology, organizations need to find newer ways to differentiate themselves and improve business productivity. The pre-planning technological investment would make the deployment plan work effectively. Selectively modernizing the digital assets would be a rational approach for the organizations. Defining the minimal viable product technology and services will not only help organizations to capitalize on the current market scenario but also to be ready for the next normal.
Banking 4.0 which is “Banking Everywhere except at a Bank” is nothing about Banking, but all about emerging technologies that include artificial intelligence (AI), machine learning (ML), Cloud computing, blockchain and robotic process automation (RPA). Rapid increase has been witnessed in the digital opening of new relationships, registrations and usage of mobile pay applications and contactless payments. This increase has corresponded with the reduction of physical connections. While banks face struggles in interest rates, loan recovery and brokerages, investing in the right technology will help them sail through the pandemic.
Views expressed in this article are the personal opinion of Sanjay Bajaj, Senior Vice President, BFSI, Birlasoft.