The digitization of the banking sector

digitization of banks

While the pandemic has made digitalization a necessity For the banking sector, most banks and financial institutions had already taken some steps in this direction in recent years. Many banks had already started to include digital in their service offering.

In fact, digitalization is the conversion of data into a digital format with the adoption of technology. Banking digitalization reduces human errors and thus strengthens customer loyalty.

In fact, the adoption of digitalization is very important for the banking sector. By embracing digitalization, banks can provide improved customer services. This provides benefits to customers and saves time.

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Today, people have access to banks 24/24 thanks to online banking services. Managing large sums of money has also become easier. Digitalization has also benefited customers by facilitating cashless transactions.

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🥀 What is bank digitization?

La digitizing stands for digital transformation, a term that suggests doing things differently, with the intention of doing better. We're talking about a fundamental shift in the way banking operates and delivers value to customers.

A true digitalization strategy involves technology, people, processes and how things are done. There is always a technological element to banking digitalization, but the journey also requires transforming the organizational culture of the bank.

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With banking digitalization, people are expected adopt new technologies and adapt to new ways of working. This can be tricky, humans are notoriously resistant to change.

Digital transformation in banking is forcing banks of all sizes to scramble to adopt new technologies and services at every level. But what does digital transformation really mean in the banking sector?

The digital transformation of the bank A lot of it involves the shift to online and digital service offerings, and the massive number of backend changes needed to support this transformation.

To be successful, the reasons for and benefits of transformation must be clarified throughout the organization. The “road map” must be communicated and the necessary training and coaching provided. Here are the key success factors for digital banking.

🥀 The key factors for the success of digital banking

Banking digital transformation banking allows you to create a more coherent and personal digital customer journey.

Creating a digital customer journey means taking steps to integrate everything into a single online platform so that the customer is treated using the same tools, sometimes by the same people, and with the same information throughout the process.

Here, practices like changing team organization, integrating technicians into sales teams, and possibly merging marketing and retail into the same team can help a lot. To succeed in digital digitization, here is what we must act on:

✔️ Redefining the customer experience

Above all, put customers and their needs first to create sustainable solutions. Banks should consider co-creating with customers frequently and often during the lifecycle of a proposal.

✔️ Adopt a mobile-first vision

From contactless banking to online account access, customers expect products and services to be accessible from portable devices, at any time. Today, banks operate digital-only models and offer their customers a full range of banking services on smartphones (Barnes, 2015).

In this way, banks reinforce their role of customer advice with the distribution of communication applications like WhatsApp, Skype, etc. They reinforce their interactions with their customers through online channels (Japparova and Rupeika-Apoga, 2017).

✔️ Develop a data personalization strategy

Building solutions means knowing what data you have, what data you need, what questions you need to ask that data, and how to interpret the answers. Centralization of existing datasets is essential.

In fact, modern banks have more data than ever. The more digital services they offer, the more data they automatically collect.

This data allows them to take huge steps in terms of updating and managing their operating model, customer service and even their business strategy. Data enables them to understand customers in new ways, using that information to identify opportunities, optimize products and services, and automate solutions.

Automation and the use of digital solutions such as chatbots and Artificial Intelligence are also part of many banks' digital transformation strategies.

✔️ Selecting the right technology platforms

When integrating new services into operations with extensive legacy processes and assets, and subject to high levels of regulatory scrutiny as a bank, deciding which platforms to use and how to use them is critical. .

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For a bank executive today, there are myriad problems to solve. There are economic, operational and regulatory pressures to manage in the short term. There is also a complicated debate over which technology will be most disruptive or key to change.

For example, some believe that the cloud offers the greatest opportunity for banks. It delivers the sophisticated, personalized, real-time services that clients and customers expect where for others, AI offers the most benefit.

digitization

Yet banks have a fantastic opportunity as they have retained customer trust and should have the capital to implement the right strategy. Cutting-edge technology and a digital ecosystem that will reduce costs while delivering better products and customer experiences will be central to success.

🥀 How to benefit from the digitalization of banking?

Here are some ways banks can improve digitalization to increase their profits and provide their customers with the convenience they need.

✔️ Partnership with technology companies

As tech giants like Amazon and Apple make a foray into consumer finance, they need someone to handle complex backend banking processes.

For banks, this opens up the possibility of technology partnerships and access to the strong customer base of these companies. Even if we ignore the role played by the tech giants and access to the strong customer base of these companies. Here are the main advantages of this approach:

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  • Banks can leverage their existing customer base and operational capabilities
  • Improve customer engagement
  • Capture more data to better understand their customers and introduce a higher degree of personalization
  • Banks can gradually build an ecosystem of services their customers need to add new revenue streams and prevent their customer base from shifting to corporations fintech emerging and digital businesses.

✔️ Invest in automation to improve convenience and reduce costs

Automating various processes can reduce costs and streamline operations to deliver more value to customers. It also minimizes overhead by reducing reliance on human staff, which can be passed on to customers in the form of reduced fees.

For example, in times of COVID-19, a small convenience like on-demand eStatements or online account verification can save everyone time and money and reduce the risk of infection per contact.

✔️ Foster innovation

Necessity is the mother of invention, and innovating new ways to reach and care for your customer base is a necessity to stay competitive and help your loyal customers during the pandemic.

Today, most financial institutions use sophisticated technology for maintenance operations like customer support. However, it is necessary to channel part of this budget towards innovation to create new products that meet emerging customer needs.

For example, Due to the current social and economic crisis, many customers have switched entirely to electronic payments. Some have difficulty repaying their mortgage, while others scramble for emergency cash and insurance products to cover future costs.

With access to rich customer data, banks can assess transactional and behavioral data to deliver personalized services to their customers. Some measures include:

  • Increase limits online transactions
  • Offer relaxation in IMEs, repayment holidays, mortgage refinancing, etc.
  • Extension of emergency credit services such as low-interest personal loans and access to fixed savings accounts
  • Monetize credential datat insightful reports and benchmark analyzes for various industries

Banks can also use the data to create personalized and engaging web stories to promote the products mentioned above so that they can be discovered by those who need them.

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✔️ Improved data management

Over the past five years, the data collected by various organizations, including those in the financial industry, has increased due to the digital transformation of the industry.

However, only a small fraction of this data is used due to operational silos in most organizations.

digitization

As any expert will agree, this untapped data has the potential to help businesses scale faster in a customer-centric way.

To improve data management, financial institutions and banks need to create a unified data management approach that consists of a centralized data hub linked to a robust management platform.

In addition to unifying data and ensuring its accessibility, it is also essential to put in place appropriate security measures for the protection of user data.

🥀 Summary…

Investing in thoughtful digitalization can help banks increase revenue while also helping customers affected by the current pandemic.

From discouraging branch visits to offering online loan approvals and account opening to training people on the digital bank so that they can enjoy the services provided by their banks.

It may be a good idea to start by listing unique growth opportunities that match a bank's current resources and that can reasonably be leveraged.

Instead of blindly investing in areas such as design, innovation, data analysis and personalization, it is prudent to identify and start with those areas that will yield maximum returns with minimal investment for better results.

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