What is Digital Business Transformation in Banking and Financial Services
Can you recall the last time you stepped into the bank and updated your passbook? That’s the reality of digital transformation in banking and financial services!
Digital Transformation in Financial Services
Over the last five years, the growth of FinTech firms and solutions has resulted in a fundamentally new and altered financial services sector.
Customer expectations are changing, competition is fierce, regulatory complexity is rising, and the drive to simplify processes is increasing, among other factors driving the need for reinvention and innovation.
A new age of open banking has made it possible for systems to interact with new platforms and apps fast and effortlessly.
Physical banks and paper systems are being rapidly replaced by sophisticated digital ecosystems that are networked. The route to digital business transformation might be difficult.
While some businesses are built to embrace digital change, the bulk will require substantial foresight and preparation.
To become more competitive, they will need to break old behavior, update cultural norms, upskill their workforce, and change their mindset through digital business transformation.
Did you know some eye-opening digital business transformation facts?
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68% of financial services companies have developed a digital business transformation strategy vs. 63% of all organizations.
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Only 14% of financial services companies implement their strategy vs. 23% of all organizations.
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54% have developed a strategy but have not started implementation.
We need to pay attention to it, as there is a huge amount of friction in the financial services industry based on two distinct factors:
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Customer’s demand for better products and services with lightning-fast delivery speeds
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Demands from the regulator that they might fix in legacy
Securing the ever-increasing amount of data whose security is paramount is also the challenge. This is so because the financial implications of any breach are an absolute loss of confidence.
which will most certainly erode brand value and might even put the company out of business. It is here that the process of digital transformation in financial services plays a pivotal role.
The worldwide FinTech industry is predicted to increase by 25 to 30 percent between 2019 and 2025, according to IndustryARC’s analysis.
Fintech Transformation in Financial Services
Earlier, financial services had a clear and simple mandate, where all they did was wait for dictation from the regulator. However, over the period,
customers’ demands have effectively pushed them to talk to the regulator to introduce new products that the customer desires.
The associated risks have made it difficult for financial service institutions and regulators to create a solid but growing framework that moves along time.
Here, Fintech and the transformation in financial services come into the picture that has evolved the concept of technology-oriented financial dealings.
Hence, it is in the interest of Financial Services Companies (FSCs) to invest in creating systems that effectively address both customer demand and regulatory processes (government) requirements.
The drive to increase transparency should make new product development and regulatory reporting easy.
Next-gen technology transformation in financial services should be the road map for technology innovation, tech productivity, and platform modernization.
Benefits of Digital Transformation in Financial Services
Amongst the numerous advantages of integrating digital business transformation in your strategic plan, enlisted below are the primary benefits:
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Reduced costs
You may actively reduce the expenses of some of the numerous tasks previously handled manually by adopting digital business transformation.
The beauty of digitalization is that it simplifies many procedures, speeds them up dramatically, and even automates them to some extent, reducing the amount of money financial companies have to spend on tedious and repetitive work.
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Improved analysis
It’s just as vital to know what to do with the data after you get it as it is to gather it. Data analytics has been the go-to decision-making tool for a long time, and they’ve gotten easier to use and more powerful than before.
Thanks to improved algorithms, AI, and various software solutions, a digital transformation will have a huge influence on your data and business analysis.
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Data collection
Digitally changing your external operations, website, and social media to capture as much data as possible from your target demographic is a terrific method to increase your company’s data-collecting activity.
Data collecting now might help you prepare for tomorrow since putting together an effective big data pipeline is an excellent approach to be ready for big data, which is a booming and exciting new technology in and of itself.
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Leveraging innovation
Client loyalty, brand recognition, and new customer acquisition may benefit from financial industry innovation. Innovative technological solutions can help businesses in various sectors, particularly the financial industry, better their business features.
You’re actively establishing the framework for harnessing innovation later down the line by investing in a digital transformation.
Factors that drive Digital Transformation in the Banking Industry
Ideally, some Fintech and financial services initial considerations must form a part of the major digital transformation plan. To cater to those, we have highlighted important factors that readily trigger the Digital Transformation in the Banking Industry:
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Continuous improvement
It requires a smooth innovation delivery pipeline based on agile principles.
The pipeline should be so efficient that it can readily follow changing market trends, test new goods, and provide quick feedback to improve products.
This cycle naturally supports on-demand service delivery, constant invention, and continuous improvement, resulting in a faster time-to-market.
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Leverage power of data
Banking organizations should realize the power of data and associated technologies and resources in achieving business goals.
They need to think more about using data analytics to understand better and track client thought patterns. This allows them to create the most relevant items that meet the demands of their customers.
This would also aid them in gaining crucial market insights that can help them improve product offers, experience, and customer relationships.
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Operating model
Customers now want a hybrid experience, which combines a never-before-seen digital experience in terms of speed and convenience with a unique product appearance and feels.
Companies may accomplish this by changing the firm into one of three operational models:
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At the management level, digital as a business
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Digital as a New Line of Business – A separate digital division to handle digital operations at the next level.
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Digital Native – A new company with its technological stack that focuses on clients directly.
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Improve skillset
According to the World Economic Forum research, more than 55 percent of banking industry professionals need to update their expertise to meet current and future operational expectations.
The desire to increase skillsets will need the essential investment in operational culture, thinking patterns, learning culture, skillset training, and other areas across teams.
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Customer is crucial.
Make sure you comprehend and assess the customer’s needs. In today’s fast-changing market trend,
Customer happiness is defined by seamless service delivery, high end-user experience, individualized product experience, transparency, and security.
Bring about a shift in operational methods and the implementation of digital platforms.
A robust partner with in-depth market and product knowledge helps drive business growth and keeps the customer at the center,
Effectively making the process of digital business transformation in banking and financial services seamless and satisfying.
So, find viable solutions to address the need for digital transformation in financial services,
which you can fulfill with the right guidance and stratification.
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