Many technology integrated banks acquired a decent percentage of the market share from traditional banks, causing stress to them. According to one of IBM surveys, 60% of the world bank representatives believe that the boundaries among various industries are blurring moderatel Simply put, the traditional bankers were now having more competitors than before. Therefore, innovation and digital transformation in the banking sector was much required now.
When we saw the traditional banks changing themselves in order to compete with the newcomers in the banking industry, we thought of highlighting some essential points for our readers that are reshaping the banking sector.
Digital Transformation In The Banking Sector
Digital transformation does not only mean adopting modern software and tools to operate efficiently. It is about changing the entire process, communication and management culture according to the modern ways of banking.
With the help of mobile technology, the internet of things, blockchain and many other technological advancements, the banking sector could evolve, and digitalisation could take hold.
Earlier, people used to take leaves from their work to get the banking operations done. Customers are now happy to experience banking on their phones which is safe and secure. Not just this, it has made the process faster and increased banking transparency as everything is recorded (not manually). Not just the customers, even the bankings employees are helped too.
Key Elements Of Digitalisation That Reshaped The Banking Sector
Blockchain
Blockchain technology came into existence to eradicate the price fluctuations and speculations in the financial systems.
A distributed database that enables recording transactions and tracking assets in a business network. It is widely used in cryptocurrency systems such as Bitcoin and Ethereum. Since the technology records all the transactions in real-time, the ownership of the financial assets gets transferred immediately, reducing the risk of theft, fraud and misselling of high-value assets & intellectual properties.
Blockchain technology allows all the active members of the financial ecosystem to have real-time access to the market ups and downs, promoting transparency and developing a sense of trust.
Artificial Intelligence
Majorly three channels are using Artificial Intelligence in banking; front office (conversational banking), middle office (anti-fraud), and the back office (underwriting).
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Conversational Banking
The emergence of chatbots or online assistants is the application of AI that is being used in conversational banking. It has improved the communication standards of banks and helps to give 24*7 banking assistance to the users.
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Anti-Fraud Banking
AI can record a huge number of transactions at the same time to uncover the fraud trends that are used to identify frauds in real-time.
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Underwriting
AI aids quicker response to the customers by analysing the portfolios and informing them about the interest rates based on the individuals for optimal risk management. Thereby, it improves the lending performance of the bank.
Internet Of Things
The Internet of Things has changed the banking sector which is visible even at the ground level. The general public can enjoy the benefits of Internet of Things in their everyday life.
The customers can schedule their bank meetings through banking apps, payments can be done via IoT linked devices with the help of the Near Field Communication (NFC) mechanism. Also, it keeps the customer updated about the financial trends, banking offers and other banking services.
IoT helps the banking sector to improve customer interaction and relationships. It enables them to deliver tailored services as per their individual banking needs. The global expenditure on IoT by the banking sector was 17.85 billion in 2008 (by the BFSI market), which is expected to rise to 116.27 billion by 2026 with a CAGR of 26.5% within the forecasting period.
Cloud Computing
Earlier transactions were recorded manually. Now, with the advent of cloud computing, the inflow and outflow of money are recorded, stored and accessed via cloud networks. It is the place banks use to store data and access advanced banking software.
It supports faster and efficient responses to customer needs. Moreover, it is an on-demand facility that involves less infrastructural investments.
In the banking sector, security has got the top-most priority which can be ensured with the integration of cloud computing. Also, it offers disaster recovery, fault tolerance and backup options to protect data.
Pros Of Digital Transformation To General Public
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24*7 Service
By integrating with AI and machine learning, banking assistance is available 24 hours, 7 days a week and 365 days a year. Now the banking solutions are just a few clicks away.
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Automated Transfers
NEFTs, UPI payments, online banking offers automated and instant transfers. Moreover, there are no time bars. You can make the payments even at the odd hours of the day.
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Easier Account Management
As the banking is now online, you can check your account transaction details (date, time, recipient, etc.) and account balance. Also, you can stay updated with all the banking offers personalised as per your needs.
Conclusion
The outgrowth of digital transformation in banking has the entire banking structure. It is completely different from the traditional banking approach. With the integration of blockchain, AI & ML, cloud computing and the Internet of Things, the banking sector has become less complicated and easy to approach. Even the customers can feel the convenience which is now offered to them. It has eventually increased the usage of banking and helped the banking sector to get more customers and higher profits. Moreover, the positive changes are evidenced in the customer’s purchasing power.