Digital tech is changing the face of banking at a whopping pace. As per a survey by Celent, 90% of US bankers expect at least a 10% decline in branch numbers over the next 5 years, with 45% expecting the decline to be 25% or more. Branch numbers have declined by 9% in the last 3 years. And banks are gaining new efficiencies and business benefits from embracing digital.
The biggest threat the banking industry is facing today. What can the banks do when the technology is challenging stereotyped banking models? Payments methods have changed, transferring money has become easy – The idea of Digital wallet or mobile wallet has a major role in changing the traditional methods of banking. According to David Shrier, managing director of MIT Connection Science, “In the last four years, venture capital investment in Fintech has increased more than 600 percent,” They have to compete with the Fintech companies by improving its standards and taking steps towards digitization.
It’s high time for the customer to walk into a branch to perform banking. Digital banking makes it easy. Two-third’s of the decisions made by the customers are informed by the quality of their experiences all along their journey. It is a tough task to satisfy the changing demands of a consumer. Digital consumer wants the banking experience to be simple and fast. Consumer protection continues to be a major hurdle for regulators in the Digital world. Understanding customers is the foundation to a sustainable advantage in banking. As a result, industries can no longer hold on to the power of advanced analytics to gain feedbacks and rate opportunities that will improve, increase up-selling, cross-selling and develop customer value.
Banks have the great opportunity to completely redesign and optimize their bloated compliance processes, building “smart compliance” in the journey of digitized customer. The Financial regulators around the globe are trying to ensure banks perform with a greater level of professionalism and do not allow any illegal activities through their services. And, the fast increase in digital banking services makes it difficult for these banking institutions to be absolutely certain with complying the rules. The biggest advantage of digital banking is the ease with which it can be accessed to engage with clients.
Modifying the operations and structure of banks for the digital age, consistently changing its cost base, and initiating better cost management procedures can help in decreasing the costs. Banks will have to change the way they are operating, making the model more customer friendly. Banks can see the cost reductions somewhere around 40 to 90 percent by digitizing internal processes with self-servicing capabilities and workflow tools for customers and staff. Self-serve ATMs is one area where we can see a quick cost-cutting gain. Going digital can help the banks do the same duties with less expenditure and less manpower.
Gathering data and using consumer insights can be a key differentiator for organizations hoping to build new relationships. Banks of all sizes will leverage data and technology to help their customers in taking better financial decisions developing the ability in saving money, achieve particular financial goals, increase financial knowledge and better budget management. The cost of collecting data and putting the same to use is highly restricted. The precision of data generation becomes the fatal in this process. With Big data coming into the picture, data gathering and data handling has become a walk in the park. Not only all the data is collected and stored but it is also secured.
In this tireless daily life, a minute saved is a penny earned. The enhancement of internet banking services has given some kind of rejoice to the customers in saving time and efforts. Those days are gone where the customers had to wait for a really long duration make a transaction at the bank. Be it opening an account, loan approval, money transfer, the time to apply, time to process, verification etc., all this chaos has been cut down on time. Depositing cheques, money all of it has become so convenient with digitization. It’s really amazing how Internet banking services have grown. Great levels of security and response time have been developed. Finally, Internet banking is no longer an interest, but a necessity.
Banks can reduce costs by up to 50% on a per-transaction basis in the next few years by going digital, according to a study titled ‘Logging into digital banking: Creating access, transforming lives’ said.
When the flaws of banking were considered, it was concluded that banks were limited by legacy systems than financial technology firms, innovation and the ability to be strong. Banking has also struggled by the inability to reach the level of technological expertise needed to develop the products compared to Fintech firms. In other words, it’s about securing the future and not being pulled into a false sense of security based on the back book. Digitizing banks can be a one stop solution for a better banking and for the future.