Digital transformation is offering a wide range of new opportunities in the banking and financial services industries. This technology transformation has created new expectations on the part of customers and has also presented new levels of competition. Digital transformation of banking involves data integration, business intelligence, and analytics software in all the departments that contribute to delivering customer services. It must to improve customer experience, minimize human error, reduce costs, increase employee productivity and streamline operations.
Before COVID-19, many organizations were considering digital transformation as an opportunity to grow business and boost revenue. However, the pandemic has forced many industries to take major action to actually adopt this transformation more quickly. Banking and financial institutions are top of this list as they need to adapt to provide services consistent with the new norm.
In recent years, digital transformation has been a matter of survival. The growing number of financial technology companies has increased competition among banks. With built-in innovation and advanced intelligence, the aim is to enhance as well as disrupt the financial service sector. Per a report by EY, fintech companies grew by 64% in 2019 compared to only 16% in 2015. Moreover, in 2020, fintech companies experienced 88% growth. They are all in the process of harnessing technologies such as big data, AI, and blockchain and offer unrivaled customer experiences.
Thus, banking and financial institutions must keep pace with the increasingly innovative competition in order to meet the requirements of the digital era.
Components of Digital Banking Transformation Success
Why does the Banking Industry require Digital Transformation?
Digital transformation focuses on fast-changing customer expectations. Banks and financial institutions have to accelerate the delivery of digital services with a focus on speed and ease of use. Banks are under pressure to review their existing processes that were created decades ago and transcend them; this also means developing new sales and marketing strategies.
Digital transformation begins and ends with the customer. Banking systems will deploy ever-changing technology with an eye towards providing a better value proposition, and increased profitability.
Here is why the Banking Industry requires Digital Transformation
1. Big Data and Advanced Analytics
Transformation of the Banking Industry requires data, analytics, and artificial intelligence to be provided according to customers’ expectations. It must feature security, engagement, and privacy for each user. Companies that use big data and analytics well will be able to perform better than their peers.
During the pandemic, customers have become used to using streaming and conferencing services like Netflix, Spotify, Zoom, and Microsoft teams for family and business engagements. They expect similar user experiences from the banks and financial institutions’ software applications. Thus, advanced data management and analytics tools are now providing personalized services to customers. Payment software such as Cloudbanking provides a solution that improves cash flow by offering various payment options, all of which are safe and trustworthy. The companies analyze customers’ expectations, review existing goals and provide desired outcomes.
AI delivers human-like intelligence for systems to organizations, including data interpretation and big data analysis, Machine learning has been deployed to reduce risk, increase security, improve productivity, reduce costs and offer products that enhance customer experience.
2. Improve Customer Experience
The use of digital technology has been on the rise since the Pandemic. The integration of new software, apps, technologies, and mobile devices has enabled customers to be more involved in the digital world and to expect that most of their online tasks will be completed quickly.
This has impacted customers’ expectations regarding the services provided by banks. They look for digital solutions and their digital preferences that serve their workflow.
3. Promote Technology and Innovation
Leaders of financial technology companies understand that technology innovation and digital transformation go hand in hand. The pandemic lockdown has created new horizons for fintech firms as they can use digital innovation to drive the paradigms for present and future use. This has played a major role in changing the traditional banking system.
There is a human component behind the technology innovation process that sets firms apart if they are successful at providing opportunities for efficiencies and improved customer experience.
4. Leverage The Power of Technology
While changing how they deliver value, banks and financial technology firms rely on transformation that can provide better services, such as applying for a home loan via a bank app in minutes or paying credit card bills in few clicks.
The modern software and technologies that have hastened the process as the banks accept digital transformation include mobile apps, automation, and big data integration, cloud service,s voice technology, Blockchain services, and 5G services. For example, a payment gateway, such as CloudBanking has been providing payment processing for the retail industry, professional services, and other service industries to manage POS transactions and accept various forms of card payment such as debit and credit cards, and EMV-compliant cards. When companies are focusing on meeting customers’ expectations, they tend to make incremental upgrades in modern technology, such as focusing on speed and user-friendly operating software.
5. Upgrade Processing System
New technologies are allowing organizations to focus and provide upgraded systems to avoid the barriers legacy application workflows can pose to transformation. Banking and financial institutions are moving to cloud computing and are processing big data in real-time.
Digital transformation of technologies provides great opportunities for efficiency improvements and in customer experience. But when the employees of the company do not have enough knowledge of these processing solutions, the technology will magnify flaws and create new problems.
Digital transformation takes a greater effort than simply implementing new software; it must minimize risks within an organization. Thus, a successful digital transformation is supported by communication and support from the top level of the organization to the employees implementing it. This has a positive impact on meeting corporative objectives, including transparency and accountability.
Banks and financial institutions must start by supporting customers’ needs by obtaining in-depth end-user feedback regarding their changing expectations. One of the best ways to improve customer experience is to make frequent, small-scale changes that meet customers’ expressed needs and preferences.
This post was contributed by Ashley Halcomb. Ashley is a researcher and a freelance content writer for CloudBanking and Switchconnect. She is an ongoing learner and always curious to learn new things. This curiosity, combined with her experience as a freelance business owner, enables her to write about subjects valuable to merchants on the CloudBanking and Switchconnect blogs as well as this one. You can check out a few other guest posts below!