Imperatives of Digital Banking

Digital Banking in Future

The future banks across the world are definitely going to be Digital in their DNA and these Four Imperatives will be pushing the boundaries for constant Innovation and disruptive changes across the Banking Industry.

1.      Changing Banking Landscape: The very definition of what constitutes Banking is being redefined now and it will continue to be done for at least a decade before the Next Age Banking becomes all pervasive and clear. The following changes in landscapes and factors will play a big role in changing definitions, viz:

a) Form of monies and their rapidly changing relative share in the marketplace, viz 

    Visible Money Vs Invisible Money

   Slow Money Vs Fast Money

    Collaborative & Pool Money Vs Owned money.

b) Bank Competitors in coming decade:

Technology & Retail Aggregators as Banking Entities in Virtual & Licensed forms- like Apple / Google/ Amazon/ PayTm / Alibaba / Microsoft/ Fin-tech Platforms. The common thread between all of these are that they transact in billions with millions every day and manage invisible and visible money both efficiently and in real time.

c) Deployment of Block-chain across all transactions and customer touch points to have an invincible, collaborative, single view of customer and their financial history and predictive future. 

2.      Banking as a Service:

Banks are set to evolve as services provider to meet needs across new age customers right from those needed by child, adult and pensioners, like study, travel, car(mobility), home(living), medical, retirement, business, corporate, transactions (interbank) – mostly against invisible money forms and automated transactions enabled by perfect combination of AI & Permissions granted by human entities. The very definition of what a “TrulyDigital Bank” is rapidly evolving and we need to consider Future Bank having a massive Digital Outlay, as a Services Provider for aspects like Mobility, Living, Hospitalization, Care, Daily Living, Corporate Ecosystem enabler –like Virtual Banks in Corporate as one avatar among many more to come.

What we are currently seeing as Digital Bank in a Bank or Project based Digital Transformations are nothing but crucible for one way and extremely emphatic Transformative Change in the Banking Industry which is set to happen, in certain banks by Choice (Innovators) or in others as a survival strategy (laggards).

3.      Changing Customer Expectations and Behaviour in Digital Age

The changes in customer expectations from a Bank, is one of the most important factor demanding the Banks to be changed once for all. Customers in the new age are expecting among the least:

a)      A 360-degree view of their relationship with Bank.

b)     Capability to address their query and service them across any channel of their choice while static or on the move within minimum time and max speed for resolution

c)      A real time transaction capability enabled by STP, Automation & their access rights enabled in a secured environment.

d)     Capability to offer them right products and services at right time based on their personal preferences and at the right location as they buy and consume at that moment or period.

e)     Respect them for their engagement for the services they consume with the Bank, rather than charge them massively on every services provided, else they are willing to switch at lighting speed to a service provider who can demonstrate these capabilities at a fraction of cost or negligible cost.

 4.      Target Operating Model of Banks:

Extreme Outcomes needs extreme initiatives and Future Banks will need to significantly tweak their high cost of operations to lowest cost of operations by exercising many levers to be able to manage the customer expectations and price sensitivity in the coming decade by using extensively aspects as:

a)      Driving customers to low cost Digital Channels & Engagement Layers.

b)     Making Automation as de-facto choice among many bank processes

c)      Enabling STP across the supply chain to max possible level and having an incremental goal on it every month and every quarter.

d)     Moving from Real Estate based operations model to Virtual Estate based models for both Retail & Corporate customers alike.

e)     Using Cognitive Automation, Cloud Infrastructure and On Demand Services paradigm to arrive and build Better, more cost effective and future viable Products, Solutions and Services for the Next Gen customers.

f)       Insights and Deep Analytics Driven Banking Model to deliver Real time, On time & On demand Services for all their customer segments.

The above bears a resemblance to Retail & Wealth Management Banking perspective but is equally applicable to Corporate and SMEs as their needs to Personalize and Customize reach exponential level and subsequently the expectancy from the Bank to treat them as Individual Customers in terms of expectations to be mapped, rather than an Industry Segment with narrowed choices.

The levers for Corporate segment to be enabled will be different, e,g ERP integration for SMEs to deliver faster and better services for Invoice Processing and payments , or for that matter Finer Segmentation strategies for Corporate to evolve a better mapped Solutions specific to their class / demographic and characteristic profiling, but the paradigms as written above will hold true in terms of futuristic models on Corporate & GTB as well which dwell on those specifics on various business functions.