Digitization – Taking banking to the next level


Technology is defined as “an application of scientific knowledge for practical purposes” (Source: Aion Digital, Nov. 2020). By this definition, some people may be surprised to hear that financial technology really started around the late 19th century, where promising finance innovators tried to advance how financial information is communicated beyond their local area.

The financial service industry has always sought to be at the forefront of technological innovation. Success has depended on it. The sector led the early commercial adoption of mainframes in the 1960s, the rollout of large-scale Credit card and ATM networks in the 1970s, electronic trading in the 1980s, and the early move into online banking in the 1990s. The financial services sector is now confronted by a new challenge, as a range of very different digital technologies – mobile devices, social media, Cloud computing, data analytics, and process digitization – all mature together. Combined, they have the power to transform markets for customers and to disrupt established players.

The impact of digital technologies on financial services will be large and pervasive. Traditional players will fundamentally reconfigure their operations. Complex collaborations among players in financial services and other sectors will be established. New entrants, some with very different business models, will emerge. This shifting landscape will hold new challenges for policy makers, in a period when both renewed economic growth and financial stability are needed.

New sources of competition, increased innovation, and greater productivity are essential ingredients for economic growth, especially in mature economies. At the same time, policy makers will need to ensure that what is likely to be a very different environment remains safe, robust, and orderly and operates in a way that both facilitates economic growth and protects the community.

Further, if a sound and stable financial system is to be maintained in the face of a rapidly changing environment, policy cannot afford to lag too far behind commercial reality. Early identification and consideration of the issues that matter may make an important difference.

Along with other industries, the banking sector also strives to adopt modern methods and integrate digital technologies into its operation routines. This complex set of measures demands a careful and calculated approach, especially in the field of financial services that involves significant funds and high risks.

The objective of an organization’s digital transformation process might be to improve the customer experience, reduce costs, streamline operations, reduce friction, become more agile or increase profitability or any combination of these objectives. The future of banking is digital. Technologies such as online payments, mobile banking and e-commerce that were in their infancy 20 years ago, can now be accessed at the touch of a button as banks and financial services from start-ups to institutions are adopting new technologies and services across the board.

As banks adopt digitization initiatives, there is a corresponding impact on human touch points. Consumer banking interactions that were once handled solely by employees at physical bank offices, are now scattered across a variety of channels such as online, mobile, telephonic and in-store, thereby impacting customer journeys.

However, it is not just customers who might deal with this change. Even bank employees experience shifts in ways of working because of digital transformation. Whiles some banks leverage digital technology for quick wins by enabling various customer touchpoints, others embark on a comprehensive exercise that transforms everything from technologies and infrastructure to services and touchpoints as shown on the diagram below:-

In the wake of Covid-19 pandemic, there is the need to go beyond the “talk” of digital transformation. As consumer expectations change and competition increases, the need to adapt quickly become the norm.


Digitization is the conversion of data into a digital format with the adoption of technology. Therefore, digital transformation in banking largely entails the shift to offering online and digital services, as well as the massive number of back end changes required to support this transformation (Source: Everfi.com).

In other words, digital banking is the digitization (or moving online) of all the traditional banking activities and programme services that were historically available to customers when physically inside a bank branch. These include activities like- money deposits, withdrawals and transfers (Source: Temenos.com).

Why is digitization in banking essential?

The banking sector has become increasingly exposed to the strong pressure of change attributed to the global pandemic. As a result, many industries are forced to go digital and work faster towards a digital culture. So, what does this mean for banks? This sort of digital transformation in banking means understanding customer wants and needs and investing in those wants and needs. Digitization is inevitable because, every industry is being digitized and the banking sector is no exception.

Strategy for banks to streamline digitization programmes

To begin with, banks should define a holistic strategy when adopting digitization. Many banks had already started including some or all of the factors below, but Covid-19 has made it clear how key the following areas can lead to digital success:-


Putting customers and their needs to the forefront to build solutions with staying in power, banks should look at co-creating with customers frequently and often in a proposition lifecycle.


Superficial digital transformation initiatives that retain legacy applications at the back-end and target only customer-facing interfaces pose challenges for employees. The lack of synchrony between applications, increases employee dissatisfaction and creates service discontinuity, eventually compromising the customer experience. The best way forward is to leverage a comprehensive approach that considers future requirements in order to enable end-to-end integrated digitization.


Building solutions means knowing what data you have, what data you need, what questions you need to ask of that data and how to interpret the answers. Centralizing data sets is key.


When building new services into operations with extensive legacy processes and assets, and subject to high levels of regulatory scrutiny as banking, choosing which platform to use and how to use them is essential. Bank employees should be empowered with the right tools to ensure frictionless and faster transactions for customers who visit their branches, call their helplines or employ their mobile apps. These tools can include software that unifies access across multiple applications as well as AI-driven product recommendation applications that leverage data from individual customer profiles.

For a bank executive today, there are a myriad of issues to tackle. There are economic, operational and regulatory pressures to deal with in the short term. There is also complicated debate over which technology will be most disruptive or key to change. For example, some believe the Cloud offers the biggest opportunity for banks. It offers the sophisticated personalized and real-time services that clients and customers expect, whilst for others, AI offers the biggest pay off.

Yet banks have a fantastic opportunity as they have retained the trust of customers and should have the capital to implement the right strategy. Central to success will be advanced technology and a digital ecosystem that takes costs out while delivering better products and customer experience.


Change management is a key requirement for any successful transformation program. When implementing digital technology, banks should prioritize conducting effective training programmes that teach employees how to use digital touchpoints. This is particularly important for branch employees as they may be required to educate customers or assist them with transactions. As tellers become sellers, they should also be trained on executing high-value and complex transactions and giving customers tailored advice.     


Banking institutions will benefit from implementing the following solutions in terms of their digital transformation strategy:-

  • Fraud Detection System
  • Know Your Customer software
  • Big Data Analytics platform
  • Data Encryption
  • Big Data mining and processing software with micro service based architecture
  • Modeling and Simulation software ( for predictive analytics)
  • Data Generation Solutions (banks don’t share their information with other financial industries: thus banks face problems with getting enough data for machine learning purposes like creating fraud detection systems).
  • Virtual assistants
  • Online banking applications

Complex solutions may be costly, but when it comes to banking, there is no room for a budget decrease in custom software development. The biggest banking market representatives have started their digital transformation years ago and now openly tell about their success.

For example, Bank of America indicates that by the end of second quarter of 2020, their AI-driven Virtual Assistant Erica completed 160 million clients’ requests and reached 14 million total users ( Source: LIGHT IT).


Modern banking is mostly associated with Big Data. For this reason, most technologies that are actively implemented during the digital transformation of the financial sector are highly beneficial for collecting, processing, storing and analyzing large amounts of information.

Here are four (4) most popular types of computer technologies in banking:-


AI and ML are powerful technologies even when they are used separately. However, their synergy multiplies their effectiveness if they are used in combination.


While this technology is mostly associated with cryptocurrency, it is used in banking for its extremely high security features. It ensures safe storage of data and protects it from tempering.


In addition to personal data centres and warehouses, financial institutions also use a wide range of cloud-based services.


Smart devices are the best way for enterprises to learn about their current and potential clients, find out their needs and desires. Banks use personal information to create customer journey maps. They also use it to develop and adjust their marketing strategies using targeted advertisements. Personal information collected using the IOT is also used as a source for further analysis performed with Machine Learning (ML) to find customer behaviour patterns and train Artificial Intelligence (AI) to recognize subtle signs of fraud.


Digital transformation has immense benefits for customers as well as the banking industry. The main benefits include:-


Offering the ability to access, use and move funds via mobile devices, digital banking apps that enables customers view their account balances, pay bills, transfer funds, apply for loans and make purchases on the go. Having a device and internet connectivity, allow the customer to access his bank account and conduct transactions from anywhere and at any time. It saves time and expenses as the customer doesn’t require to go to the bank branch and stand in the long queue to be served.

With the right digital banking platform, the customer can make 1:1 appointment scheduling possible or offer the ability to live chat with bank staff, all from the bank’s mobile app. Digital transformation has definitely made things more convenient and customer friendly.


Digital switchover of the banking industry has ensured that the banks are available for customers 24/7. Complaining about banking hours is a thing of the past for customers. The customer can avail his or her account to check records anytime and can also access a number of banking services round the clock.


Customers may not be comfortable receiving standard offers they don’t need but are positive about receiving timely offers aimed at solving their particular need. Software with the right analytical and data mining and processing compounds, will enable the bank to customize offers and make this process automated and safe.


Digital solutions help manage marketing lists, allowing banks to reach broader markets and built closer relationships with tech savvy customers.  CRM platforms can track customer history and provide quick access to email and other forms of online communication. It’s effective for executing customer rewards programmes that improve loyalty and satisfaction.


Not only do digital platforms improve interaction with customers and deliver their needs more quickly, they also provide methods for making internal functions more efficient. While banks have been at the forefront of digital technology at the customer end for decades, they have not completely embraced all the benefits of middle ware to accelerate productivity.


Traditional banks that rely mainly on paper processing can have an error rate of up to 40%, which requires reworking, coupled with lack of IT integration between branch and back office personnel, this problem reduces business efficiency. By simplifying the verification process, it’s easier to implement IT solutions with business software, leading to more accurate accounting. Financial accuracy is crucial for banks to comply with government regulations.


The convenience that is offered by banks has resulted in retention of customers and increase in customer base due to attraction of new customers. There is also reduction in human error in calculations since records of transactions are maintained electronically, which allows the generation of reports and analysis of data anytime for different purposes.


The luxury of instant banking service which does not require waiting for a considerable period of time, is another benefit of digital banking. It saves time and is just a much faster option. No longer do customers have to set aside a chunk of time each day to make payments or deposit cheques. With the push of a few buttons on a customer’s mobile device, they can accomplish more than they can with key strokes on their computers or talking to a call centre representative. Big Data processing systems with micro service-based architecture ensure fast and safe transaction processing.


Digital banking gives customers a lot of payment options. Customers can choose to use their mobile device to pay when payments are enabled with a banking app or they can decide to use their debit card.


One of the keys for banks to cut costs is automated applications that replace redundant manual labour. Traditional bank processing is costly, slow and prone to human error (Source: Mckinsey and company). Relying on people and paper also takes up office space, which runs up energy and storage costs. Digital platforms can reduce costs through the synergies of more qualitative data and faster response to market changes.


With the use of effective fraud detection systems, the problems associated with fraud schemes would be controlled. Also, multi-level validation of transactions will eliminate the possible mistakes of customers and staff.


Data encryption save banks from external and internal leaks of information to frauds and competitors. Most importantly, it increases the safety of transactions. Banks can benefit from extra layers of security to protect data.


When managers extract same information to build same reports over and over again, it amounts to mindless and inefficient labour for staff and the bank. The reason is that, the bank will be paying salaries for something that is done by the staff for hours or days but can be done even better by one piece of software within seconds.


Any digitization exercise creates organization wide changes within the core business model and across processes, teams and individual roles. These initiatives invariably disrupt traditional ways of working. These organizations must be empathetic to employees’ impact and take proactive steps to minimize disruption and simplify adoption.

However, to do this, they must first understand the scale of changes and their impact. These include:-


Digital-savvy customers prefer convenience of online and mobile banking. Consequently, the role of tellers is no longer related to merely executing transactions. As customer-facing agents, tellers are in the perfect role to educate customers about new banking products, financial instruments and innovative services. Hence, tellers are increasingly becoming sellers and are taking on additional responsibilities.


Handling customer queries and complaints has traditionally been a person-intensive task. However, the emergence of Machine Learning and robotic process automation is enabling banks to automate work flows and implement Chabots to manage customer service. This may displace a significant portion of the existing workforce who must then re-skill themselves for newer roles such as supervising bots and ensuring quality.


Machine Learning (ML) and Artificial Intelligence (AI) have several applications in back office operations such as automated document processing, product recommendation, fraud detection, legal contract analysis, targeted marketing and anti-money laundering.

Typically, these areas have long been managed by large teams of employees. The introduction of AI techniques is enabling organizations to minimize such dependencies allowing them to work with smaller and more focused teams.


Not all digital transformation initiatives are holistic. Sometimes, banks merely enable front-end digital touchpoints while retaining back-end legacy systems and applications. Often, this results in frustrated employees who struggle with archaic applications process flows while juggling the old with the new.


Digital technology trends are bringing about an unprecedented rate of change in the core skills. Workforce are necessary to have key skills to work with digital role in the banking sector such as cognitive ability, physical ability, content skills, process skills, complex problem solving skills, resource management skills and social skills.

These skills help the employees to work with data and make databased decisions which will become increasingly vital skills across many job positions. Employers need to ensure that they are equipping the workforce with the right skills, as well as investing in the right talent. Due to digital transformation, some current jobs will be taken over by AI, whilst huge opportunities in technology related jobs such as cybersecurity specialist, credit analyst, robot programmer, block chain architect, process modeler expert and delivery managers will be more in demand.

Consequently, employers need to upgrade their skills to appreciate the role of analytics in each banking function. Digital transformation will compel the banking sector to hire the employee with the required skill set to enhance the quality of the human resource to meet the day-to-day requirements of the sector.   IT professionals may have an edge here and they may have far future in the banking sector.


Digital transformation also affects customer journeys and interactions. Hence, banks must proactively educate their customers about new touchpoints and seek feedback on service delivery.

Some of the changes disrupting customer journeys are:-


As banks invest in digital to increase the number of customer touchpoints, they also look to cut costs by reducing the number of physical branches. For non-digital savvy or elderly customers, this can be quite challenging- as they must learn how to work with new apps and online banking services. Furthermore, some customers prefer the in-person support that is available in a physical branch.


Sometimes, the introduction of online/automated telephonic support leads to convoluted menus which increases wait times and customer frustration. The reduction in the number of customer service representatives, further compounds this issue as customers are unable to access human support to resolve their queries.


Limited access to real time human assistance across various digital touchpoints can have adverse consequences. Without assistance, customers may be unable to proceed with the transaction as they are unaware of what to do next. In such cases, they tend to abandon the process resulting in loss of business for the bank.


In some digital transformation programmes, banking institutions retain legacy requirements such as expecting a customer to print, sign or affix a photograph onto an application form when using digital touchpoints. This lack of synchrony causes friction and frustration for digital-savvy customers.


Digital transformation in banking has proven a bumpy path, especially for retail banks. Faced with the constantly evolving demands of the modern customer and increasing disruption from rapidly emerging financial technologies, traditional banks are under pressure than ever to adapt and innovate.

The future of banking with digitization looks promising and it is expected to change the image of traditional banking and bring more services to customers. However, there are certain challenges faced by banks that need to be addressed. These include:-


This is one of the most critical concerns with the digital switchover in the banking sector. With more information digitally accessed and transmitted, data security becomes a challenge which needs serious attention. The increasing digital transactions and the advancing technologies have opened up more possibilities for the hackers and fraudsters that function online.

Cybersecurity threats have grown tremendously as a result of digital transformation in the banking industry. Huge sums of money are recently being skimmed off belonging to the large financial institutions.

As the world is being increasingly connected digitally, it has also opened up entry points for cybercriminals, therefore cybersecurity in digital banking is the need of the hour. Cybersecurity is the practice of protecting electronic systems like computers etc. and data from malicious attacks.


Financial institutions need not just the latest technology but also people with the right skills to improve the functionality of new platforms and systems. A limited pool of specialists in specific areas becomes an obstacle. Other difficulties associated with technological personnel include:-

  • A lack of in-depth knowledge of products, processes, domains or systems.
  • The increasing cost of hiring and retaining good people.
  • Too much dependency on core staff.

“The key challenge financial services Chief Executives globally are faced with is how to attract train and retain people who, for example, combine digital and industry-specific skills – few as yet possess such hybrid capabilities “ (Source: John Terry – PWC’s Global Financial Service Human Resource consultant).


Various non-financial institutions provide banking facilities to customers. They allow the customers to make transfers directly into other people’s bank accounts, thereby leaving banks out of the picture. However, it may be noted that banks are more regulated, therefore they are more secured.


Banking is one of the few business areas that involve risks of extremely large financial and reputational losses. That’s why all digital transformation initiatives in this area must be carefully planned, modeled and tested.

The main goal here is to prevent any disruption of the existing flow of business processes and integrate innovations as seamlessly and safely as possible. Otherwise, vulnerabilities may appear that lead to leaks or loss of confidential information or a chance of unauthorized access to bank accounts.


“If services fail or customer expectations are not met, regardless of whether the root cause is system or process generated, then a savvy customer is likely to switch”( Source: David Poulton – SENLA). There are too many legacy platforms, applications and technologies in the banking industry.

According to research conducted by Deloitte many of the systems that are currently in use were developed and implemented in the 1970s and 1980s. That’s why more and more banks are thinking about replacing their core IT systems. This is also true for cybersecurity and data privacy. If a bank can’t provide security, how can you entrust it with your money?


Banks and other financial institutions should understand that many of their customers are still making transactions through physical channels. That’s not only due to age or ignorance, but because the bank is not in a position to provide another option. The 2017 World Payments Report (WPR) claims that worldwide digital payments are predicted to reach 72 billion transactions by 2020.

Payments technology is evolving at an unprecedented pace to emerging markets. Keeping pace with such technologies will require certain investments from banks. Banks will also need to reconcile themselves to the fact that their new competitors also have an interest in digital payment technologies.

Contactless cards and online and mobile payments are all becoming more prevalent. The era of Facebook and Twitter has ushered in a new desire: customers now want to use their smartphones for both communications and conducting business wherever and whenever they want. It all boils down to reducing the role 0f physical payment channels.


With such high requirements, banking demand cutting-edge technologies and best specialists available on the market. As a result, significant costs are involved. However, high costs on top-quality software result in bigger income and safety.


It is well understood that digital transformation is imminent and cannot be avoided by businesses that strive to succeed and sustain for long in global market. Therefore, the focus should be on how to overcome the challenges faced by banks that restrain from the inevitable transformation.

Here are some of the proven techniques for effective digital transformation:-


Banks should adopt the latest security measures for cybersecurity and stringent security rules which they must adhere strictly. According to survey done by Gartner, 99% of the security flaws are known vulnerabilities which were left unattended. Hence, it is important to stay ahead and be proactive in securing the vast and precious business information. This can be done by adopting a combination of latest data security tools and technologies and also keeping them updated from time to time. At the same time, security should not become an inconvenience for the customers and end-users. The right balance between rigid and convenient security measures, without compromising on data privacy is critical to the business success.


Many businesses in their effort to stay updated on the latest trends in the industry, may adopt digitization. However, what they often fail to realize is that ultimately, it is the customer who drives the business to success and not the technology. However, the technology is vital because it is capable of providing valuable customer insights which can drive success. That’s how successful digital transformation will help businesses to succeed. Technologies such as Artificial Intelligence and Machine Learning are sophisticated, but they help businesses in utilizing their customers’ behavioural patterns and purchase patterns and offering personalized recommendations and customer experience which keeps them latched to the brand.

This is critical when striving in a highly competitive global market because the customers have at least a hundred alternative options and can switch over to another brand within a blink of the eye. Offering exclusive personalized experience to esteemed customers will help to gain brand loyalty which will help in long-term profitability.

The marketers will know better that lead-generation is the most challenging and expensive aspect of any business. Hence, it is important to retain existing customers with the help of advanced technologies. Digital transformation offers critical solutions to customer retention by offering customer-centric solutions.


The transition from dated and disparate legacy banking systems to a modern, digitally connected environment can be daunting. The shift will require a huge upfront investment for the necessary applications, customer processes and integrations with external systems, security and maintenance. On top of that, people will have to be trained and constantly updated so as to minimize the investment and derive great value from it.

The availability of centralized platforms for monitoring security and compliance, newer technology is inherently safer and more in line with compliance requirements. This shows that there has been heavy investment in customers’ data and privacy that will boost their confidence in the bank.


Securing social media channels should be a priority. All communications should go through centralized monitoring system that automatically detects violations of corporate policy and mitigates them before they enter the wild. In an industry where trust is everything, the importance of implementing effective yet user-friendly controls over social communications cannot be overstated.


Though many businesses adopt trending technologies such as IoT (Internet of Things) and Cloud computing, they have no clue as to how to utilize them to get the best results. IoT, for example, offers extremely beneficial information as to customer behaviour and usage patterns. When businesses learn to use data from IoT to their advantage, they can benefit from such critical information which can be the game-changer.

With Cloud computing, you can share specific information with your stakeholders and clients making your business more transparent and data-driven. Utilizing the best of technologies optimally is critical to digital transformation. To make the most of such trending and valuable technologies, businesses must partner with competent service providers or outsourcing vendors. The right outsourcing partners will offer great insights and right solutions to long-term sustainability. They will also help the business to ensure compliance with statutory regulations which is also critical to digital transformation.


While adopting Big Data analytics tools, you also need to recruit and train your resources to use those tools in the best possible ways. Prepping the employees to data transformation is a meticulous process. It requires a change in their attitude and aptitude.

With all kinds of misinformation on digitization floating around, especially the ones that affect their employment, the workforce may feel threatened. Training them on the right platforms and upgrading their skills will not only improve their morale but also increase their efficiency and productivity.


Since digitization has become the talk of the day, there seems to be a misconception that bank branches are destined to go the way of the dinosaurs. This simply isn’t true because many people still prefer face-to-face interactions when it comes to discussing important financial matters, like personal loans and mortgages. Digital tech isn’t meant to serve as a complete replacement for these traditional interactions – It’s meant to complement them.

Digital transformation in the banking sector is a necessity, if banks don’t want to be left behind by the evolution of digital technology. However, where most people see challenges, banks should see opportunities to provide better services and establish a great relationship with their customers because, at the end of the day, that is what’s important – the customers’ satisfaction and trust.


As in most industries, digital transformation in banking is a very expensive set of measures. A financial institution must consider this fact and prepare the full amount of resources required for successful implementation. For banks, ensuring seamless service delivery is paramount to customer as well as employee satisfaction.

Today, banking has moved from a person-centric to technology-driven service thanks to online and mobile channels. Thus, digitization programmes must consider how digital touchpoints impact customer journeys and employee roles. The impact on employees includes taking on additional responsibilities, dealing with archaic systems and learning how to use new technologies. For customers, this impact ranges from navigating different channels, dealing with limited human assistance and the lack of synchrony between front-end and back-end systems.

Thus, to ensure seamless adoption, banks should use a holistic strategy that trains employees, seamlessly incorporates human assistance across channels and touchpoints, leverages the right tools for employees, and ensures smooth integration between front and back end applications. Such a strategy will help banks prepare for the future and reap more benefits through digitization programmes.

Covid-19 has accelerated digitization in banking as customer expectations changed during the pandemic. This potential digital change brought by the pandemic, will also help banks cope with the tougher operating environment.  Digital transformation is becoming a norm to be adopted by businesses across the globe. The whys have given way to the how, making technology adaption only a matter of migrating to newer and better options. For the long term, it will be a fundamental step in boosting profitability and returns in the banking sector.   


ROBERT OWUSU is a Fellow of the Chartered Institute of Bankers (Ghana). A seasoned banker with wide experience in Retail Banking, Internal Auditing, Project Management, Electronic Banking with high specialty in Internet Banking. He is also a Consultant and a Supervisor of Chartered Institute of Bankers (Ghana) examination.


e-mail addresskwa [email protected]; Tel. 0240 821597 & 0546 907904


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