Technologies already played a key part in financial operations before the pandemic. However, many customers preferred traditional banking and visited their branches to conduct transactions. The coronavirus restrictions have greatly accelerated the shift towards digital transformation in banking and finance sectors. As a result, the global digital transformation market is set to expand from $469.8 billion in 2020 to $1,009.8 billion by 2025.
Digital transformation in banking involves applying innovative technologies – blockchain technology, artificial intelligence, process automation with a focus on decreasing manual workloads and others – to improve existing financial products and services. Digitalisation does not necessarily mean a replacement of traditional processes or legacy systems. On the contrary, financial corporations have several modernisation options to consider:
However, digital transformation is not exclusively about technologies; it rather involves business enablers or what businesses can do with them. Rebuilding operations, procedures and relationships with customers are the essential purposes of digital transformation. To reach these goals, businesses often partner with technology companies providing financial software development services.
Here are some of the technology solutions that boost digital transformation in banking:
Start by mapping your customer journey and indicate what can be optimised with digital solutions. For instance, you might want to streamline the process of logging in to online banking applications by enabling biometrics-based authentication. However, keep in mind that technologies are only effective when supported by people and processes.
The modern banking customer prefers an omnichannel experience. Make sure you consolidate a connected set of databases within the organisation and look for opportunities to optimise business operations. This can lead to the creation of a new business unit or an entirely new digital banking division.
Be ready to move to a new business model, where the bank is more like a business platform. Platform banking is an online marketplace managed by a bank or another entity that offers banking and possibly non-banking services. Platformification improves the customer experience and allows the provision of services beyond a limited portfolio.
If you’ve ever checked your balance after making an online purchase, you’ve reaped the benefit of digital transformation in the financial sector. The digitalisation of the banking industry brings many advantages for customers, small and large companies, and banks. These advantages include:
Despite the many benefits, digital transformation in banking faces challenges, including:
Many financial organisations have started their transformation, revealing plenty of the opportunities digital transformation presents. Here are some of the examples:
With more and more customers turning to the digital world, banks must be there to provide seamless, secure and personalised experiences. By embracing digital transformation, financial institutions can modernise outdated processes and improve their bottom line by offering better customer services.
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