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Digital Banking

The word ‘digital’ is being used loosely and liberally these days. In fact, it has become more of an adjective than a noun. For example, there’s a whole campaign by the name of ‘Digital India’. When this word is attached to a country or an industry, it implies provision of services through self-service channels with restricted need of human intervention. This is widely achieved via usage of internet. In case of banking industry, the self-service channels also include Mobile, ATMs and IVRs. Such digital channels hold potential of increasing number of interactions with bank as compared to branches, and hence increase scope of revenue for the banks.

The following is a list of aspects which get accomplished with digital banking:

  • Enhanced Customer Experience

When we talk about banking on internet and mobile channels, it is natural for the customer to compare the banking experience with the experience they obtain via other applications on the same channels. Take Uber as an example, which gives its customers anytime-anyplace flexibility with the help of a highly optimised interface. Such user experiences set benchmarks, which raise customers’ expectations for similar level of engagement from banking channels as well.

 

Thus, Digital banking requires consistent and seamlessly integrated banking experience across all banking channels, also known as omni-channel experience. The customer should not feel like s/he’s a stranger to the bank upon hopping from 1 channel to another, say from laptop to mobile. The channel platforms should continuously strive to keep up with latest technology standards such as HTML5 and CSS3 for efficient Human Computer Interaction. Customisable landing pages, widgets and the data contained in such pages / widgets provides the much needed personalisation framework to the customer.

 

There is an increased need of awareness about upcoming devices. The screen sizes of tablets, phablets and mobiles keep changing as per changing trends. What with smartwatches also reaching people’s hands, banks need to continuously tweak the user experience being provided on such channels, and stay future proof for any new screen size / device.

 

  • Product and Process Transformation

Banking services are becoming more unorthodox by the day and some of the services can be provided only by digital channels. Even for the mandatory task of account opening, the customers do not want to visit branches and desire origination from digital channels’ itself.

 

Let’s consider few other upcoming innovations in banking. The practice of Crowdfunding allows funding a project or venture by raising monetary contributions from a large number of people, often performed via internet-mediated registries. Similarly, evolving technology such as the ‘Internet of Things (IoT)’ makes it possible to digitally transfer ownership of all kinds of physical property. In fact, after the global economic crisis, the degree of trust on banks has diminished and customers now want proof of transactions, and hence technologies like blockchain are growing in popularity. Efficient delivery of such services is only possible through the digital route.

 

  • Bank as an advisor

Banks are currently facing threat not only from players in the banking industry, but also from leaders in other industries such as Paypal, Amazon, Google, Walmart and Apple. Other than providing a superior user experience, these companies have made encroachments into transaction processing platforms by enabling peer to peer payments.

 

The banks too can expand their horizon of services and enter into advisory role for its customers. The banks already have vital data at their disposal for this purpose. By deploying an Analytics Platform, the banks can delve into behavioural data obtained from digital channels and categorise its customers into segments on parameters such as attitude, behaviour, risk and income. After analysing these segment, the banks can then further build backend systems so as to provide niche services, whose objective would be to provide higher value to the customers. For example, if a customer wishes to know about car loan interest rates, bank can also provide inputs on the best 1st hand and 2nd hand cars in the market based on customer’s budget, along with optimum insurance plans. By expanding beyond typical banking, the digital banks can emerge as winners in this changing competitive landscape.

 

The above-mentioned are only a few of the many aspects. A good Digital Banking practice also involves effective website management, reliable security measures, social media integration, KPI measurement and Gamification among others. While any new start-up bank can easily keep these aspects in mind, it is tough for the incumbent banks to begin this digital transformation journey with legacy systems.

 

However, banks should realise that the number of cross selling opportunities increase manifold via the digital banking route. A correct implementation along Digital Banking theme removes duplicity of codes across multiple channels, thereby reducing cost. Also, an API based ecosystem leads to an assembly-type arrangement and helps in bringing together different backend partners, thereby increasing service variety.

 

The need to digitise banks cannot be ignored. One way in which traditional banks can join the bandwagon is by creating a parallel arm which behaves like a start-up and adopts all principles of digital banking. Once this parallel entity is complete, existing customers can be migrated to it. Digital Banking is a conglomeration of agile innovations, and the digital banking journey can only be initiated when the banks themselves become more agile in their approach.

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