Digital banking technology and trends: digitization

Digitization for a digital civilization

Are banks keeping up with consumer demands when it comes to digital banking offerings? Consumers expectations are focused on digital channels and banks can’t afford to ignore it.

Today’s consumers are looking for the banking sector to be up to date with their online ubiquitous world. Financial services are expected to be mainly digital providing a similar experience as any other digital product. Real-time reports and analytics of a customer's financial life, highly human interaction based real-time action possibilities, online, fast, paperless and customized loan and investment decisions, are just some examples of their expectations. In order to respond, banks must have a digitization strategy to be able to keep up to date with these new consumers while avoiding drastic measures.

New digital customers expect to be able to consume bank services with the same ease as to buy online a product from Amazon or eBay. They want their data to be nurtured and used responsibly and rationally. These customers do not want to have to provide pay slips, since the banks have their income transfers from their employer; or answer any questions about them based on information that should already exist and be processed automatically in the bank systems.

New regulations and digitization

For 2018, banks need to take digitization as a leading strategy as strong digital regulations are being enforced. They need to bet on new or reinvented regulated processes, taking advantage of the already existing data and analytics. They need to be combined with artificial intelligence, straight-through-processes, intuitive interfaces, around-the-clock availability, personalized treatment and real time services. 

Although digitization incurs in some costs, when banks achieve high levels of digitization they can also offer more competitive prices because of lower costs; create faster decisions based on automated processes; scale faster and at a lower cost due to more agile and open structures and interfaces; have better operational controls and have less risk.

Reinventing the bank's business process

Undergoing a digitization process does not simply mean to automate an existing process. Banks must reinvent the entire business process with updated goals such as:

1. Remove human dependent tasks; 

2. Increase the speed and seamlessness of the customer digital experience; 

3. Increase the awareness and capacity to analyse and react on the existing data in the bank;

4. Develop automated decision making;

5. Adapt to new regulatory and fraud challenges;

Digitization is more than a technology-based change, it also has an extensive impact on the banks business side by pushing innovation on new agile development methods, new operating models, people’s skills, organizational structures and internal roles. All those need to be redesigned and created to match the reinvented processes, market and regulatory needs. 

The existing banking knowledge has to be adapted and immerse in technology standards without being loss. Banks have to be able to take advantage of new technology possibilities like cloud computing, Artificial Intelligence, mobile devices, IoT and Big Data & Analytics. They need to incorporate them via new roles like data scientist, chief information security officer, user-experience designer or chief innovation officer. 

On the technical part existing data models, reports and data interfaces should be adjusted and rebuilt to enable better decision making, support Open API protocols, performance tracking, and customer insights. The change from (time and money consuming) paper and manual processes to automatic straight-through-processes combined with the ability to collect data to better understand customers, cost drivers, and causes of risk is a business enabler for the years to come. Real-time dashboards allow managers to address the bank problems before they become critical and better understand their digital process performance.

What about the benefits of digitization?

The benefits from digitization are enormous and a definite requisite for a bank in the challenging year of 2018. For the last couple of years, banks have mainly been cooperating with fintechs for most of these digitization requirements on an outsourcing basis. Now, the majority of big banks are acting to incorporate most of these fintech and digital services, seeking positive results of these projects at customer and organization levels.

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