As technology advances and evolves, the banking sector strives to adopt more modern methods that reflect these changes. The sector also aims to integrate digital technologies into its routines of operation. However, this is a complex set of measures that demand a calculated, careful approach. This is particularly true for processes requiring significant investments and high risks.
Digital transformation for banks means affecting many changes in the industry. The goal is to integrate fintech solutions as processes get automated, digitized, and optimized and to strengthen the safety of data, too. The process consists of changes both large and small that work to reshape the technologies and methods used in this area.
Several elements are powering the digital transformation trend including our improved connectivity and how much we rely on smart devices. The demand for a premium user experience is also critical. So, what is digital transformation in banking? This list outlines the main factors:
Financial institutions need to analyze and understand what their customers want. This list includes personalized products and seamless delivery service. Stringent security, a top-quality user experience, and total transparency are also important. A customer-centric approach is vital.
Digital transformation is not based on introducing computerized technologies alone. The infrastructure behind everything being built and developed also plays a crucial role. This relates to the information flow that impacts front-end digital operations. It’s critical that banks modernize any legacy infrastructure they have, as this will allow them to support new digital platforms.
The ideal innovation delivery pipeline relies on flexible principles, making continuous improvement possible. As such, it facilitates rapid feedback mechanisms and the testing of new products. Tracking changes in market trends to reveal which products and services are due for an upgrade is then also made easier.
This cycle allows for constant innovation, continuous improvement, and on-demand delivery of services, which leads to an acceleration in time-to-market.
Nowadays, customers want a hybrid offering that combines never-before-seen digital experiences with the convenience and speed of a personalized product. Delivering this is possible when businesses transform their operational models on three different levels:
Financial institutions need to ensure no aspect gets overlooked when modernizing their legacy infrastructure. Even factors that may seem obsolete could well end up making a critical contribution.
The potential for all minimum viable solutions needs identification so they can be leveraged and introduced across digital channels. The best and most effective utilization of existing options must be undertaken as well.
Financial institutions need to adapt and embrace the digital transformation revolution if they want to keep pace in an increasingly dynamic business environment. Certain firms, however, remain skeptical of the actual value of this kind of commitment.
These companies should consider and review the benefits of digital transformation in banking to gain a better understanding of its long-term value for the business and its customers alike:
Acquisitions and mergers are commonplace in the banking and financial services industries. Historically, combining companies with dissimilar physical systems could cause compatibility issues. This was a source of real frustration for each of the IT departments involved, but cloud-based solutions have resolved this issue to a large extent.
The more data that management teams can collect, the better informed their final decisions will be. As things currently stand, data drives the most important solutions, and digital transformation assists financial institutions in making the best call based on accurate, real-time information that meets their customers’ needs.
Modern society places great weight on accuracy and speed. This means that efficiency is a critical component of digital transformation. Digital analytics have made it possible for banking procedures to be faster and more straightforward.
Examples of digital transformation affecting run-of-the-mill banking activities include:
Digitalization plays an essential role in the business of increasing customer acquisition and retention and being a competitive brand in any sector of today’s technologically-based society. People expect rapid results, and this demand encompasses near-instant online banking solutions rather than cumbersome, slow traditional banking processes.
Digital transformation promotes cost efficiency over the long term because it requires fewer ongoing financial investments than traditional money exchange processes. For instance, digital transformation has made cashless online transactions accessible and straightforward. This has reduced the money spent on intermediates to ensure physical cash gets handed from one party to another.
The inherent risk of ignoring the necessity of digital transformation in banking is that financial institutions may end up becoming obsolete. This is due to the recent competition this market faces from neo banks and fintech firms that are giving consumers access to the latest technology.
Major banks are struggling with legacy tech systems that are slow and outdated. Consumers want deeper insight into their personal finances. The demand for features that allow for the interconnection of multiple accounts and access to cutting-edge functionality also shows no signs of slowing down. Banking digital transformation processes cater to this need.
Neo banks have low-cost operating models and traditional ones have very high overheads. Younger, technologically-competent employees want challenging work and avoid jobs with outdated tasks that are no longer particularly useful. The adoption of banking digital transformation caters to this aspect.
Digital transformation also allows for increased specialization. The old idea of marketing products to the average consumer doesn’t work anymore. Digital transformation allows organizations to attract smaller segments of the market.
Digital transformation is a critical move for banks, and the time to begin the process is now. Finding and creating the kind of development team to work on projects that will make the changes you require possible is easier than you think.
Kunai provides a range of services in this field and we’re always happy to hear from you. Talk to us and see if we’re the right fit for your digital transformation needs.