May 29, 2023
With rapid innovation reshaping the world, the banking industry itself is undergoing a meaningful change. In 2020, the banking sector experienced a transformative change, particularly in the realm of digital banking. While digital banking has been gaining traction for many banks over the past decade, the pandemic and evolving customer expectations have accelerated the need to adapt. This accelerated need for digitization solidifies digital banking as the inevitable future of the industry.
Digital banking extends far beyond what we often associate with online and mobile banking, encompassing a much broader scope. It is leading the path towards profound transformation within the banking sector and goes beyond the surface level features, encompassing a comprehensive set of digital programs undertaken by the bank. This includes the availability of banking services through mobile applications, and integration of advanced technologies like data analytics, cloud banking, AI etc.
The process of digitization presents limitless possibilities and opportunities. While banks may associate digital banking with service delivery channels, achieving a complete transformation requires significant organizational involvement and structural changes across all aspects of banks for a guaranteed transformative change.
Recognizing the immense significance lies in banks fostering a future-ready and resilient workforce, embracing technological advancements rather than perceiving them as threats. The best way to achieve it is to have a practical approach that involves remapping competencies and promoting knowledge sharing and development.
The foundation of a future-proof Digital Bank rests on four critical pillars: Omnichannel banking, Modular banking, Open Banking, and Smart Banking. Working on these pillars and moving away from legacy systems and processes is important to optimize the transition and stay ahead in the digital era.
Omnichannel banking is also referred to as multichannel banking. It seeks to create a seamless and uninterrupted experience for users across various touchpoints by streamlining multiple channels. This approach eliminates internal silos within the organization and fosters synergy. among all channels and departments.
Modular Banking emerges as a convenient solution for banks, by liberating them from inefficiencies and expenses associated with outdated legacy systems and processes. Serving as a central platform between customers and service providers, modular banking offers sophisticated and flexible solutions. This approach caters to 3 customer preferences: convenience, customization, and control. Additionally, it enhances the agility of banks and improves overall customer-centricity.
Open Banking is also referred to as “open bank data” and is a progressive approach that grants third-party financial services providers to consumer banking, transaction, and other financial data from both banks and non-bank financial institutions. By embracing this practice, banks can position themselves as forward-thinking entities, gaining insights into the necessary changes required for enhancing customer experience, understanding customer behavior, and ensuring data privacy.
Smart Banking has a strategic approach to it through which banks can harness the power of data and advanced analytics to predict and provide personalized solutions to their customers. By utilizing AI tools such as Machine Learning, cognitive computing and natural language processing, banks can effectively compete with fintech companies and deliver personalized services to the customers.
In the contemporary landscape, customers are savvy, and well-informed. They seek partner organizations that cater to their needs, understand them intimately, and offer rewarding experiences. Recognizing this crucial aspect, banks must proactively address these expectations to future-proof their institution. The time to embark on this journey is now!