Banking Institutions Must Embrace Digital Technologies To Remain Competitive
Digital transformation is not just about moving from traditional banking to a digital system but it’s an important change in how banks and other financial institutions learn about, interact, satisfy and exceed a customer’s expectations.
Technology has become the most efficient tools these days but the optimization fully depends on how much we understand these tools, and apply them. Further ahead, we observe subtle changes in technology taking place which is far too rapid, and each moment there are multiple new variants.
It is something even developers in the recent past have raised their concerns in a hushed manner. Therefore, we could but imagine the struggle of the people and professionals, who try to adopt new tools of technology in their organizations, be it a financial institution or non-financial institution.
On the other hand, the competitive landscape has intensified and the banking institutions continue to fight on a number of fronts, and the wave of fintech startups, digital rivals and tech giants too present a constant looming threat which is unlikely to go away soon.
It’s though challenging, but at the same time, a wave of innovation in the sector offers a number of golden opportunities for those who are ready to adapt fast. Omni-Channel approach, Blockchain, analytics, AI, IoT and etc. are some of the best tools and approaches to feel confident about creating growth strategies for the organization.
In the year 2015 and early 2016, for example, the banks in the UK and primarily the bigger ones continued to invest in modernizing their infrastructure as well as focus on delivering services through digital channels. But, continued innovations, rising costs, newer variant of technology arriving fast, and greater emphasis on automation have created too much pressure on them.
However, considering demonetization, the US elections, GST and fewer other changes in the banking policies and norms especially in India, it would be helpful to discuss and share the digital technologies which could be relevant to the banking sector. It is even more relevant in context to the fact, when our Prime Minister and Finance Minister, have led greater emphasis to make India a digitally smart nation.
It is a fact, our banking institutions run on legacy system and they rather depend on a more predefined inherent processes and ways of operations. It is no harm to continue with the legacy system but to keep pace with modernity and ease of functioning; we must need to imbibe the digital technology. It will be then one can create a win a win situation for the customers as well as for the financial institutions.
In a true sense, an efficient digital transformation begins with a greater awareness of digital customers’ behavioral patterns, choices, likes, dislikes, preferences, spoken as well as unspoken needs, aspirations and etc. To achieve all these banks need all the assistance of tools, technologies and innovations. On the other hand, these are equally important to meet their goals and growth strategies, but for that to happen, they must act and adapt fast.
It is important to emphasize, that the most effective way to understand and bring the organization from traditional banking to digital banking, will be Omni-Channel approach. Besides, generic tools and approaches, there is a slew of newer tools of technology, which can assist our banking and financial institutions. Let’s cut to the chase and highlight some of the top tools of technology which have the potential to revolutionize our banking and non-banking space, if used smartly and with timely intervention.
Open banking is the new norm
It is a well-connected ecosystem for financial and non-financial services with multiple underlying service providers and which in all probability could be safely assumed to be the future of banking.
The recent launch of UPI by the National Payments Corporation of India (NPCI) will particularly serve as a gateway to future innovations in the open banking domain. It will embolden payment service providers to create state-of-the-art products or services without being limited by the underlying account relationships.
In addition, customers will be given the flexibility that they desire and a unified interoperable interface will allow all service providers to innovate for better customer experiences.
Banking on the cloud technology
Most progressive banks have already adopted cloud computing, and further to it, the disruptive technologies that depend on cloud computing have already started changing the face of the businesses—Big Data, Blockchain, artificial intelligence, IoT, and etc.—will be leveraged using cloud computing.
Indian banks too are coming around to the idea that the business agility provided by cloud far outweighs the concerns. Business models for emerging banks and fintechs will also be largely driven by the cloud-first strategy.
Post demonetization drive, India has moved towards a cashless society, and as banks prepare to handle the increased influx of electronic financial transactions, cloud will provide banks with the required feasibility to meet these needs. For example, one could expect Siri to help you move funds and open a new fixed deposit account with your bank easily.
Block chain will be a great catalyst
The banks in a bid to try to become more efficient and agile to meet the increasing needs of customers, Blockchain will prove to be one of the catalysts for re-imagining processes. In 2017, banks will progressively move projects from pilot to production and try to leverage Blockchain to automate their inter-organizational processes and communication.
Artificial Intelligence a compulsive reality
AI has the unique potential to transform both front office and back office operations with its self-improving programs. For example, in ICICI bank software robots have been deployed in over 200 business processes and that has reduced the response time to its customers by up to 60%.
It has already proven to be a great differentiator in customer experience on digital channels, and security measures with its integration within the banking infrastructure. Further ahead, intelligent digital assistants are commonplace, and these self-learning programs keep getting better with every interaction and communication.
More things and apps to bank on
Mobile first strategy has created a slew of various apps and platforms to bank on and Indian banks are using and adopting them to reach their customers and provide customized services to them. However, digital technologies are evolving at an unprecedented rate, and so is customer adoption. To keep pace, banking institutions would need to extend services on a variety of connected devices and wearables. We have popular apps, which still widely used, are not the only channel for customer communication but today we have smart virtual personal assistants on mobile phones that can engage with customers in a more interactive way.
Time to adopt wearable technologies
In a recent report, which was shared by a fintech firm has emphasized, that 96 percent of the banking professionals polled, and they believe that wearable technology will impact the banking industry. It is estimated that only 15 percent have currently rolled out and majority of them would expect to do in the next two to three years’ time space.
It is true, most of the banks have begun to feel their grips with online and mobile banking, but advances in wearable technology provide a glimpse of customer interaction in future. And, there are limitless wearable devices, which can’t be ignored for using them for our banking needs – smart-watches, wristbands and even Google Glass style eyewear – could offer quicker and easier way to check account balances, provide alerts, and loyalty rewards.
"Wearables are going to be the part of future banking, and not too long from now," says Clayton Locke, Chief Technology Officer of Intelligent Environments, a British firm which built one of the first banking apps for the popular Pebble smart-watch.
It must be noted here, most significantly perhaps, the ability to make payments via wearable devices using mobile wallets such as Apple Pay could play an important role in popularizing the use of wearable devices. Industry experts believe that developing apps for wearables can help banks meet customers' fast-evolving demand for digital interactions.
It is about making banking and payments more convenient for the users. It won't be for everyone though, but there will be enough people out there who will be wearing an Apple Watch and they would expect their financial information on their wrist.
Banking architecture simplification
Banking architecture simplification, in other words, complex architecture will be broken into smaller pieces to enable in easy deployment, attached to the existing hybrid models, and could be upgraded for specific functionalities. In this process, we will witness a sea change, in which banks will move to componentization instead of the traditional monolithic architecture.
It will not only increase agility to upgrade and modernize selectively but to keep pace with the current technology trends, and also substantially help in risk-mitigation of the important projects. Banks will further look to simplify architecture, by implementing enterprise-class applications, which will enable their capabilities required across multiple business units, and eliminate glitches that currently exist.
It is highly critical for banking institutions to consider all the newer digital channels and technologies, as part of their integrated strategy and become more robust, and digital in their approach to provide the most efficient products and services to the customers.
