If you are a banker, technician, agent or, most importantly, a BFSI segment customer, I assume you must have heard the new buzzword “Digital Banking”. In my circle, I spoke with several people and, interestingly, no two people seem to perceive this in the same way. Well this is kind of an exaggeration, but you get the picture! This made me pause and think what this could mean for someone like me who is an industry expert to answer if a colleague, friend, or someone in my mailbox asks me about this. As a true CrossFit athlete, I follow at least the first rule: Tell everyone you meet about CrossFit.
The reason I mention CrossFit is not just because of my fascination or even my obsession. CrossFit is a bit complex and overwhelming for the uninitiated, but simply put, it’s a strength and conditioning program that optimizes fitness. CrossFit defines fitness itself in terms of 10 components: cardiovascular endurance, endurance, flexibility, strength, power, speed, agility, coordination, precision, and balance. But generally, if you ask one of your friends what fitness is, you may get multiple answers. For example, a runner would say ability to run half a marathon, or a weightlifter might say deadlift of at least 1.5 times body weight, or a yoga fan might say do 108 Suryanamaskaras. Well, each of them can be right in their own way. Your definition of physical fitness may be doing all of that, or it could just say I’m fit enough if I can get my 9-5 job done without taking any sick leave on an assessment cycle.
Along the same lines, banks could interpret Digital Banking on their own terms, and similarly, people like you and I will have formed an opinion based on our own exposure.
Banks of all shapes and sizes have become very streamlined over the years by adapting to IT / ITES (IT-enabled services) and have achieved varying degrees of success. However, due to the lack of a focused and long-term approach, the creation of separate systems, rapidly changing business and operational scenarios, etc., the planned objectives may not have been fully met. Some of those “failed” initiatives could have been driven by the institution’s drive to be an early adapter of a technology or trend (betting on the wrong horse). On the contrary, we could lose a great opportunity if we do not recognize and bet on a winning horse. So the trick is to bet on the right horse, at the right time, that is, when the odds are low. Typically, industries use what’s called a hype cycle to evaluate a new technology or trend. If you are interested in understanding what a “hot cycle” is, check out the Gartner methodology. I will try to tie together some of the key aspects of digital banking as, unlike most buzzwords, it is not a one-size-fits-all service or technology.
Right around the time (2008-10) that I spent about one more year in Brussels, three big banks (Fortis, Dexia and KBC) that always seemed extremely risk averse bankers from the BeNeLux region, began to face great pressure and its value eroded. significantly and sparked heated debates in the community, who thought that their money is always safe with the banks (whether as a depositor or shareholder). What really happened there is very complex. The key factors are the huge sovereign debt that ranges between 84 and 99% of GDP, the lack of government for 533 days, etc. These triggered liquidity problems. If you add to these other upheavals in the banking industry globally, it is easy to see that “trust” within the system was under threat. How would we build trust? Being transparent. Customers need (don’t want!) System-wide transparency. The younger the customer base, the more acute that need is. This, when you look at the changing customer experience and expectations of the retail industry (Amazon, Flipkart), transportation (Uber, Ola), the food industry (Zomato, FoodPanda, ZaptheQ), you know where the banking industry is. Customers have reset expectations in terms of value, experience and options. The key takeaway for the banker: User experience – rich, consistent, mobile (anywhere), secure, and enhanced value.
Many people I have interacted with recently on this topic felt that internet banking or mobile banking is digital. Yes, this is just the beginning of what Digital Banking could be. They probably cover an older set of customer expectations. Moving on, could we see a day soon where there is no paper in any of the bank transactions? When I say paper, I don’t mean just the coin! Few things that are already in practice in few banks and that are gaining momentum are: digitization processes within the bank (such as client incorporation, loan application), check truncation systems that allow you to take a photo of the check on your mobile and send to your bank, etc. – there by providing efficiency in decision making, ability to customize processes based on specific customer requirements, save some unnecessary trips to the branch, etc. This could mean, in other words, implementing document / image management systems, business process monitoring and management systems, integrating these components within existing IT solutions. The key – digitize internal processes.
In recent years, social media has had a greater impact across borders, be it the Tahrir Square revolution, the Ice Bucket Challenge, which mobile to buy, how we order and pay for lunch, or identifying a good place to dine. And turning Dutch while we share the bill . Social media is already bringing disruption in terms of which bank to trust, what can you expect from a bank in terms of services, giving voice to your dissatisfaction. Which in turn means that banks must be on the same social media by listening to their customers, selling their services, and also ultimately attracting new customers, retaining customers, and most importantly, becoming ” The Goto Bank “if the client has multiple accounts. As an example, which could not be expected a few years ago, in Kenya, one of our prestigious client’s Twitter users (@ChaseBankKenya) uses Twitter to connect, launch and share CSR activities, and address inquiries and concerns from clients very effectively. That is to say, The scope factor.
Another silent thing that happens behind the walls of a bank is called Data analysis or Big Data. These generate unprecedented insights into customer behavior and preferences, driving extremely focused strategies. These also help clients understand their expense analysis, plan their budgets, manage their financial goals, and more.
In addition to these key components, there are several others that could make the bank more “digital”: chat and video discussion services to bring the bank closer to the customer when they need it, or educate customers through online tutorials such as education. financial, tax planning, etc., integrating various solutions and systems in the bank to reduce data replication and redundancy and helping the bank create more direct processing systems there, reducing errors, operations costs and increasing efficiency throughout the system. Banks could significantly increase seamless data exchange with other partners such as regulators, clients, government bodies, making the whole process much more transparent and efficient.
Finally, the big question is what should be achieved from the great list of tasks to call a bank “Digital Bank”? Like in fitness, there is no one-size-fits-all solution. Each bank has to define its own strategy, execution plan to achieve the goal of customer satisfaction, operational efficiency, and improved overall shareholder value.
