Digitization in the Banking Industry: How to Emerge a Winner

While at its core, the role of the bank is as it was many years ago, the banking sector has actually always faced disruption. With technology, however, the time, pace and magnitude are different – specifically, the scale and speed of innovation, and the ability of the end user to adapt new technologies. Banks must therefore act quickly and intelligently to keep pace.

Digitization is a race that disrupts many industries, and one where the winners and losers will have been redefined by the time everyone reaches the finish line. What this means is not that banks will become obsolete, but that it will change based on who was able to keep up – and those that couldn’t will simply be left behind. The good news is that each bank can determine its own fate by choosing whether it should evolve and adapt, and how it goes about it. The sooner that we accept that digitization is not a trend but something that will impact every part of the industry, the sooner we can adapt.

On the outside, digitization is all about how banks interact with customers. Typically, individual customers are more digital, and consequently, there is often more focus on retail banking within the sector. Even within that, it is important to focus on a few, select user experiences. Institutional banking is also starting to become digital, led by transaction banking. On the other hand, it is just as important to recognise the benefits of digitization internally. Digitization can help banks remain competitive by ensuring they are operating in a faster, cheaper and more scalable manner. 

  The good news is that the banking needs of most customers are mostly similar and relatively predictable – all except for digital natives or millennials, who behave rather differently than their traditional counterparts. We often use digital natives and millennials interchangeably, but the distinction is important when defining tech savvy customers; though age is a large contributing factor to one’s ability to being comfortable with technology, it is not the defining factor. We recommend partnering with your customers and building a differentiated proposition with them, instead of for them.

  Competition for the attention of the tech savvy customers is unprecedented (see image below). Therefore, it is vital to act smart and fast, or risk disruption. The intense competition also offers the opportunity to potentially partner with the FinTech companies, which would be a fantastic way for banks to become more innovative. This isn’t a new concept, as the pharma industry has been ‘acquiring’ innovation for many years.

  We advise you to interact and communicate using the channel of choice for customers. This means banks have to be flexible to communicate anytime, anywhere and seamlessly across interactions, essentially blending the “phygital” world (the digital and the physical worlds together) to cater to customer needs. A focus on convenience is also important; ensure simple and clean user experiences, interfaces with fast responses and fulfilment, making you connected with their day-to-day life. Finally, blend above- and below-the-line marketing (ATL and BTL), focus on influencers, physical activations, community building and gamification.

Many banks, or their leaders, fear going digital and try to avoid it because they do not understand it – and that fear is a trap that should be avoided. By adopting a fast, flexible and secure operating model and technology backbone, every bank can evolve its proposition. Be diligent and agile in your project planning, create partnerships to accelerate delivery, and maintain focus. Despite its fast-paced nature, digitization is a long-term commitment, and should be treated as such in order to emerge a winner.