It wouldn’t be an overestimation to say the success of the ‘Uber model’ inadvertently paved the way for certain developments in the banking and financial space. Many people may question the impact of a ride-sharing app on a mammoth-sized ind?ustry like banking, but it’s nevertheless true. What differentiated Uber from other, more well-established ride-ha?iling service providers pre?s?ent then, was the customer experience it offered. Power?ed by a mobile and easy interface, Uber was one of the first brands to deliver a customer experience that was defined by end-to-end digitisation.
The banking and financial services industry, long cons?idered as resistant to change, today faces strong headwinds from fintech. On the other ha?nd, demands from consu?mers across both wholesale and retail a segment for gre?ater speed as well as ease of access and payments is only increasing, thanks to the proliferation of mobile devices and affordable internet connectivity. Challenging the leg?acy banking industry’s passive approach to IT and digitisation, fintech has underli?ned the relevance of digital transformation as an important business strategy for incumbent players across the financial services spectrum.
Digital transformation, th?e?refore, is comprehensive str?ategic solution that can help financial service providers deliver the value-addition th?at consumers today seek. According to the World Bank’s global findex database 2018, number of adults with bank accounts in India increased to 80 per cent between 2014 and 2017. Mobile is at the ce?ntre of these developments, emerging as a tool for consumers to access core banking services as well as simpler peer-to-peer-payment methods, irrespective of their geography. Moreover, mobile has enhanced the customer experience like never before.
What does it mean to be truly digital? Digital transformation is more than just a buzzword. Rather, it’s an inevitability that any business must prepare for, to remain competitive in the market. It’s more so for the financial services sector. Rising competition from emerging players and the growing sophistication of technology solutio?ns, along with the increasing operating costs and dearth of resources for the legacy banking sector, have accentuated the need for financial services firms to rethink their business models.
Being digital is not about throwing together a bunch of products and services on a we?bsite or mobile app without upgrading the underlying enterprise processes involv?ed. It’s about a delivering a truly efficient customer exper?i?ence by providing users wh?at they want, when they want it and how they want it. Digital transformation of financial services entails restructuring both front-end, as well as back-end operations. Mor?e?over, key areas within an organisation, like strategy, operations, and marketing, along with the staff themselves, are crucial components of digital transformation, which can help further an organisation’s perceived goals from the integration of technology.
Thus, more and more financial services providers, to adopt a data-driven approach to the delivery of products and services, want to leverage advanced technologies such as big data analytics, artificial intelligence, and robotic pro?cess automation. What they need to do is build an IT infrastructure that supports th?e?se techs, allows them to reinvent business model and operations, and ultimately enables them to target new opportunities to increase profitability and growth.
Financial companies have taken two ways towards digital transformation. One is th?r?ough the way of collaborations with third-party techn?o?logy providers and using APIs to integrate specific techno?logies or functions on to their main IT architecture. The other is the ‘plug and play’ model, which is fast gaining traction among service pro?vi?ders who want to go fully digital. Hence, it has come to be that various firms across the financial services spectrum, such as insurance firms, investment banks, and capital markets players, besides ban?ks and lending firms, are increasingly leveraging the plug and play model.
Tools like cloud computing and DevOps automation play an important role in he?l?p?ing them build a lean digital infrastructure that facilitates both back-end and front-end processes, minus the cost of maintaining and upgrading a physical IT infra. Also, cloud-native platforms ensure fas?ter deployment of web or mobile applications, while automated protocols embedded within such platforms provi?de support in securing the enterprise infra and countering security issues.
While financial firms rec?o?gnise the need to make the transition towards digitisati?on, many of them don’t know where to start or how to appr?oach such a transformation.
(The writer is CEO & Founder of ONGO Framework)