“Digital is fundamental to our business and to the future of the entire financial services industry.”
—Dennis Hudson, Seacoast Bank
The novel coronavirus seems to have taken all by surprise and exposed vulnerabilities that were never anticipated across all sectors of the various economies including banking. Obviously in our lifetime, we have not had to deal with anything remotely to the magnitude of this pandemic. Until now, the world seems to have become more adept in responding to the ever-increasing natural disasters. Significantly, governments so far have tried to flatten the curve to slow the spread of the disease by introducing several “WHO certified protocols”. However, the gravity and speed of this pandemic, is significant enough to change future individual and institutional behaviours.
One such change is expected in the area of digital transformation by banks. Digital technology has existed for some time now but sadly, majority of banks have been slow to move in this direction and many have barely even started this journey. This is about to change dramatically and urgently because the COVID-19 experiences have significantly changed the dynamics with a “no turning back” option. It is time to reinvent the digital transformation wheel to propel banks to become more efficient in delivery and significantly creating added value to customer service.
A departure from legacy banking.
The digitalization journey is propelled by easily accessible technologies, stable economic fundamentals and a good regulatory climate. Some research showed that 82% of global banks are already implementing a digital transformation program and 62% expect to be digitally mature in 2020, compared with just 19% in 2018. Transformation is no longer an option but a must.
Digital transformation is certainly not solving single business needs with individual, disconnected digital technologies but the need to transform all processes, functions and interactions, while delivering a compelling customer experience and distinguished engagement. A bank`s digital transformation strategy should respond to its business strategy requiring a fundamental change in culture from analog to digital. This can be carried out in many ways:
- Digitalization should be an ongoing process
Banks need to be able to move fast to stay ahead of the competition. Rapid innovation is only possible if you can leverage on flexible, modular and reusable digital banking capabilities. Opening up to a bank`s ecosystem is another key differentiation factor. Open Banking enables strategic partnerships with Fintechs, Telco’s, Insurance providers. Such partnerships allow financial institutions to offer value-adding 3rd-party services which can unlock new revenue opportunities.
- End-to-end Operations should be digitalized
Addressing integration challenges is one of the first items on CIO’s digital transformation agenda. Institutions have to streamline operational processes with automated workflows.
Once optimized and connected, a business is ready to embrace future-proof digital banking capabilities such as instant payments, digital customer onboarding, origination and servicing and next-level technologies, like artificial intelligence (AI) and robotic process automation (RPA).
- Omnichannel Customer Experience
It is high time financial service providers shifted their viewpoint from bank-centric to customer-centric. The modern customer lifestyle is a harmonic blend of the physical and digital worlds. Exceptional digital experiences, in turn, are key for expanding a bank`s customer base and share of wallet.
- Future-proof microservice architecture
In a digital world, being “customer-first” goes all the way back to a bank’s technology stack and the ability to quickly roll out new customer-centric initiatives. Microservice architecture plays a beneficial role in the business of digital banking because it adds flexibility to a bank’s digital transformation journey. A digital banking platform with a microservice architecture will allow the continuous delivery of software applications, regardless of the size and complexity of the project.
It also enables an organization to quickly innovate on its technology stack, easily scale vertically and horizontally and strategically extend the platform using modular building blocks.
- Integrations should be seamless
A digital banking platform shouldn’t turn into the next legacy technology in a bank`s IT landscape. Instead, it should seamlessly integrate with the core banking system and with the other existing and future systems, modernizing the institution`s infrastructure.
A robust Integration Framework is a key advantage of a digital banking platform, enabling process, channel and system integrations, unified customer data, central monitoring, business continuity, IT asset reusability, and more. With the help of an Integration Framework, a bank can connect the business end-to-end to increase its efficiency and focus on what really matters, which is growth.
Last but not least, consider the digital banking platform’s security and stability the bank needs to be able to provide 24/7 service availability with frictionless payments, regardless of the market conditions operated in, be it a mature or a developing market.
Revolution is on.
Digital technologies have impacted the way we live and interact, including our expectations of financial services. Customers now demand digital-first, instant and personalized financial services through any touch point.
How can financial institutions win in today’s customer-driven, open, and competitive market? Market conditions certainly favour digital banking champions who are able to offer superb customer experiences. Still, many financial service providers find it challenging to balance new regulations, fintech disruption and the hefty burden of legacy systems while paving their road to digital.
The Future of Banking is now
Undoubtedly experts can only predict but nobody can be certain about what the post-coronavirus world will look like. However, there is one reality that has been proven without a doubt; Change can happen in an instant. The key is to imagine possible outcomes and set in motion those initiatives that can position your organization most advantageously. The most likely outcomes include:
- Being ‘digital’ is not optional.
- Working remotely will become much more common, it`s the new normal.
- Innovation is imperious; “Stay ahead of the pace of change or you`re toast.”
- Personal development will protect people from unforeseen circumstances
- Sustainability will be valued by consumers and shareholder
A digital banking institution should be built in anticipation of change. This will alter the way almost every bank operates, requiring new processes, skills, products and approach to meeting consumer needs. Employees must be prepared to accept change, be aware of the ways change can impact their work, and be willing to disrupt themselves as needed in order to cope with the new digital culture.
In the end, a good strategy or great technology will not overcome a culture that is not in alignment with the transformation taking place. If leaders within an organization do not engage and get the support of employees at all levels, digital transformation efforts will fail.
About the Writer:
Ebenezer ASUMANG (CGIA) worked extensively in mainstream banking and NBFIs. He is a Google Certified Digital Marketer, an Author and a member of the CGIA Institute, USA. www.ebenezerasumang.com
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