Be Ready For Digital Transformation In Banking

Digital Transformation Has Hit the Bfsi Sector – Are You Ready?

In 2021, Business Insider outlined how the number of digital banking users in the US will exceed 200 million in 2022. A year later, Twilio reported that digital transformation in banking sector had accelerated ahead by 6.5 years – courtesy of the pandemic.

Again, in 2022, a PwC survey of executives from financial services, consumer markets, and health industries, among others, revealed that 60% of the executives viewed digital transformation as one of the primary growth drivers of their respective businesses. Indeed, digital transformation seems to have well and truly hit the BFSI sector, and understandably so.

But there’s still a long way to go. A 2022 article by the Financial Brand revealed that insurers and executives from retail banks considered their business a “beginner” or “implementer” with respect to digital transformation technologies. The same article also brought to light that 90% of the financial services IT budgets were reserved for “maintenance.” Similar numbers were presented in a McKinsey-led discussion, where developers in traditional banks were cited to be spending almost 70% of their time maintaining IT infrastructure and accommodating upgrades.

So, of course, there’s a lot to improve and explore. With this article, we look at the different use cases and applications of banking & digital transformation, how such applications accrue benefits for businesses, and how those benefits can be realized with the help of an expert partner.

What Is Digital Transformation In Banking?

Digital transformation in banking industry is the integration of digital technologies and innovative strategies into the financial services sector to improve operational efficiency, enhance customer experiences, and adapt to the evolving market landscape. It involves the modernization of traditional banking systems, processes, and business models, enabling banks to deliver seamless, convenient, and secure services through various digital channels.

Digital banking services are essential to remain competitive in the digital age. By embracing new technologies and innovative business models, banks can improve their operations, deliver better customer experiences, and meet the evolving demands of their customers.

Use Cases/Applications of Digital Transformation in Banking Sector

With a myriad of functions and features that can be evolved over time to make BFSI offerings more compelling, there are a variety of ways in which digital transformation in banking can be applied to solve business challenges.

Customer Service

Customer support is critical in the financial services industry, but it can be challenging for banks to provide a consistent and seamless experience across multiple channels. Digital banking services can help banks to overcome these challenges and improve customer support in a number of ways:

Provide faster and more accurate responses to customer requests. Digital tools such as chatbots and voice assistants can provide customers with immediate assistance, and intelligent CRM systems can help support agents to quickly access case information and provide accurate resolutions.

Gain better visibility into each case. Digital transformation in financial services helps to integrate data from all customer interactions, regardless of the channel used. This gives support agents a complete view of each case, which can help to reduce miscommunication and ensure that issues are resolved quickly and efficiently.

Empower support agents with the right tools and information. Digital tools can provide support agents with access to case knowledge, AI-powered recommendations, and other resources that can help them to provide better service.Overall, digitalisation in banking helps to provide better customer support by streamlining operations, improving communication, and empowering support agents.

Product Innovation

Banks and other financial institutions can improve their product offerings by using cloud computing to integrate data and better understand their customers’ needs.

Cloud computing is becoming increasingly popular in the financial services sector, with one-third of applications now running on the cloud.

Banks can use cloud computing to improve their product offerings in a number of ways, such as:

• Easing the onboarding process for new customers.
• Enabling designers and engineers to collaborate and build more complex products and services with fewer rounds of prototyping and testing.

Here are some specific examples:

• Digital banking services allow customers to open new accounts online quickly and easily.
• Cloud computing and AI can be used to help designers and engineers worldwide access workbooks and collaborate on complex projects.

Overall, cloud computing can help banks and other financial institutions to improve their product offerings by providing them with the tools and data they need to better understand their customers’ needs through product engineering services.

Enhanced Operations

Banking & digital transformation can help to improve existing operational processes in a number of ways, from automating accounting, payroll, and compliance workflows to integrating internal and external data for enhanced visibility and decision-making. Digital transformation can help improve the BFSI sector’s existing operational processes. Not only does automation enable a faster, smoother workflow with reduced errors, but it also enables financial services institutions to easily scale, innovate faster, and reduce costs.

In fact, digital transformation in financial services uses technologies like Intelligent Robotic Process Automation (iRPA) to go beyond traditional automation to help financial services institutions address cybersecurity issues emanating from the increased usage of mobile devices, cloud computing resources, and IoT devices. iRPA can help with the analysis of a substantial amount of security data, audit of human and bot actions, and drive proactive threat hunting, security incident response management, password management, etc.

Key Technology Elements for BFSI Digital Transformation

Digital transformation in financial services offers many benefits like improved operational efficiency, enhanced customer offers & more customer-centric process. To develop a complete digital transformation strategy, banks and the financial sector should focus on identifying the right technologies & tools to support their digital transformation goals.

With the advantages that digital transformation can offer, it’s no wonder that the BFSI sector is keen to realize its benefits. However, it’s important to identify which of the various technology elements can help with digital transformation in this sector.

AI-Powered Systems

From using AI recommendations to help customer support agents proactively resolve customer issues to employing Generative AI for fraud detection and risk factor modeling, the BFSI sector must embrace AI at every level. While many banks are still in the early stages of digital transformation, they must work on using AI-powered applications to accelerate their progress.

Cloud

Cloud’s advantages are well-documented; from reduced costs to scalability, flexibility, and ease of use, migrating the workloads to the cloud can help the BFSI sector ease the pressure of digital transformation on their infrastructure, allowing them to focus on business problems rather than operations and implementation concerns.

Analytics

With data coming from a variety of sources, both internal and external, it’s important for banks to develop analytics solutions that can help them derive value from data points. How does this value come about? With predictive analytics, businesses can identify operational trends and patterns, take proactive action on customer issues, detect fraud faster, and provide more personalized offerings to their customers.

How Can a Technology Partner Help?

An experienced partner can help banking and financial services institutions by:

• Identifying the right technologies to evolve the products, services, and processes
• Assessing the impact of digital transformation and developing a well-defined roadmap that’s aligned with business goals
• Providing guidance on the implementation of new functions and migration to the cloud
• Ensuring compliance with regulations
• Providing ongoing support through technology refreshes and on-demand support
• Providing valuable insights into the latest trends and developments

Want to learn more about how technology can help to improve your business? Reach out to us here.