Digital banking is the new ‘normal’

Banks are at a tipping point where the digital revolution has just begun. Today’s customers no longer look for new financial services by visiting bank branches or collecting product brochures; changing trends of younger audiences seek tech solutions for their financial needs, but not necessarily through banks. They shop for alternative financial providers online, through a computer or a mobile device. 

The digital age has changed everything we do: the way children play, the way we shop, make friends, communicate, socialise and work: In an era where everything in life is made easier with digital self-services, it’s time to make the leap: Digitalising the banking experience. 

Gone are the days where consumers look only for the best company or the best product. With the boundless changing behaviours, consumers are constantly raising the bar on their expectations, and if the banks cannot deliver the service proposition that the customers demand, the customer base of banks would erode drastically. As such, it’s imperative that the banks embrace digital transformation and positioned themselves well, in continuing their journey.  

‘Normal business hours’ – no longer recognised by customers

However, the transformation is far beyond just shifting from traditional banking. It involves understanding how digital creates value, the market dynamics, digital consumer behaviour including their preferences and aspirations, which demands the banks to be more customer-centric than product-centric. 

In today’s context, customer convenience has become more important than just delivering a financial solution. Digital consumers do not view “convenience” the same as yesterday’s consumers. Speed of service is a critical aspect where customers consider ‘valuing their time’ as a vital component in customer service while flexibility and constant availability 24*7 is a demand against the traditional restricted banking hours. 

Consumers will not compare you only with your direct competitors, but with all possible solutions or service providers.  This requires the banks to revisit the way customers are being valued and to embrace digital disruption to encounter the expectations of todays’ consumers, if they wish to remain competitive.  

Through digitalisation, customers have the benefit of ‘banking at their convenience,’ where they can access their accounts or do transactions through any device, anytime, anywhere. Opening of an account will be facilitated even through a mobile device, without any physical form filling, and without having a customer to ever visit a physical branch.  

While face to face interaction evolves through a mobile phone, physical cards and cash will be replaced through digital wallets and QR codes. Omni channel solutions will provide a unified customer journey through various touch points where the customer could switch from a personal computer to a mobile halfway through completing an interaction, and it will allow them to continue exactly from the point they left off even if they changed the channel prior to its completion. 

The continuous digital evolution will warrant a greater, seamless customer experience with an extended reach for their financial needs making ‘digital banking,’ not merely an additional feature, but a fully integrated banking experience.

The new way to work is embrace technology

Apart from the enhanced and simplified customer journey, digitalisation provides banks an enormous opportunity to prosper in their business. Streamlined operations through adaptation of internal processes to digital (elimination of manual work, repetitive processes, working long hours, etc.,), will drastically improve the complexity of traditional manual operations and boost productivity. 

Expanded cross sell up sell opportunities will attract and retain customers through new customer experiences with reduced operating costs. In addition, digital solutions will rapidly increase the bank’s connectivity and refine decision making through Artificial Intelligence (AI) and advanced analytics tools. 

The new customer experience will undeniably strengthen the relationship building through the extended reach via digital multi channels and bring an enhanced brand reputation that will lead to higher customer satisfaction and an increased revenue for the bank. Whilst increasing the efficiency of internal operational processes through digitalisation, the bank could assign its valuable human resources towards more strategic tasks, to generate new business leads and to focus on embracing technology for creativity and innovation.  

Creating value from Information

Generally, banks try to sell every product to every customer and adopt various strategies in differentiating themselves; but time has come for banks to consider and identify what gives the best experience for customers, as non-bank entrants are establishing in providing financial solutions to outperform banks. 

Digital banking allows customisation, where the banks could use data and analytic capabilities to identify individual customers and improve their digital offerings through personalised solutions. This in turn will increase the customer engagement. 

If the banks do not make the maximum use of the information gathered through the analytical capabilities and embrace the strategies that will provide quality, convenience and value though a remarkable digital consumer experience, they are at a high risk of attrition of their valued customer base. 

Millennials won’t wait for banks 

Another challenge in the digital age is the arrival of Millennials ‘the most digitally-savvy investor group’, into the banking system. Their unique beliefs, trends, lifestyle and the financial behaviours will inevitably demand the banks to be digital. With high speed technology and instant Google answers, the millennials expect one click access for their financial solutions too. 

“Fast, cheap and mobile” being their buzzwords, they always demand convenience and personalisation. Cutting-edge technological solutions are a basic requirement for their services where mobile platforms, self-directed investment plans, auto generated recommendations, gamifications and social media are on the top of their digital mix. 

Further, nowadays, the digital consumers find comfortable with virtual assistants like Siri, Google or Alexa who deliver answers to their questions and expect similar experiences through intelligent technologies for interactive solutions. 

With these distinctive priorities and preferences of the millennials who will be the drivers of the banking revenue in the “not-too-distant future”, the banks needs to be more innovative and instant, in delivering Digital banking solutions for on-boarding, servicing and shaping their products and business models to meet these expectations, against the traditional banking methods.

Time to make the leap

Digital capabilities could rapidly turn the customer journey, and fintechs are capturing more of the banking value chain and coming between banks and customers, which could result in eroding the revenues of banks in the foreseeable future.

Therefore, the future of banking will depend on its ability to leverage the power of digital technology, data and analytics to provide services that will ensure a seamless customer journey, to the expectations of today’s tech-savvy customers. 

Failure to adopt a digital strategy within the organisation will pose the banks to a high risk in stagnation of new customer growth and increase in attrition.  To stay profitable and grow in the new digital economy, banks need to expand their focus beyond offering digital services, to transform themselves to a truly digital bank. 

However, the scope of digitalisation must encompass both aspects, delivering an enhanced customer experience and maximising efficiency, at a lower operational cost thus improving profitability. 

Given the magnitude of the opportunity as well as the demand, banks do not have many more years left to adapt, since becoming a digital bank is at an inflection point, making its vital for banks to start formulating a winning digital strategy. 

(The writer is the Group Chief Information Officer of Sampath Bank PLC, an Engineer graduated from University of Moratuwa, holds an MBA from University of Colombo and a Certified Management Accountant.)