Impact of digitalization on banking sector: A sneak peek
Over the years, the scenario in the banking sector has changed for the better and evolved and emerged for offering improved customer service support. Newer concepts are emerging like cryptocurrency, bitcoin, and so on. For instance, in United Kingdom, “challenger banks” have sprung up that offers services that are only digitally based and are known to have been offering customer service that is unparalleled. And interestingly, more than 20 such banks are operating already in the UK.
photo/ The World Spectrum
Digital banking – Transformation
When we talk about digital driven changes, it implies the integration of the technology in various areas that leads to changes in the manner in which operations take place. What are the benefits that you get to see when such integration takes place? These changes include the following-
- Reduced operating costs
- Various banking related processes become hassle free and streamlined
- Customer experience improves remarkably
- It paves way for better technologies like incorporation of AI or Machine learning into the banking system.
- It also enhances knowledge management system that improves the quality of workforce
The fact that banking sector is essentially “data driven” makes it even more important to keep data protected for insurance purpose and adhere to regulatory norms. And this also means that data from the yesteryears might have to be stored. Most importantly, storing the data is just not enough; you must be in a position to “translate” the information into information that is helpful and meaningful.
Role of blockchain technology
Many banks have already incorporated blockchain banking systems in their operational processes, which is a welcome change as compared to the conventional methods of banking. Thanks to the banking management systems. It has also been noticed that blockchain has been able to curtail banking fraud activities to a great extent. Its application has been in areas like
- Interbank
- Corporate banking
- Peer-to-peer banking
- Cross border banking
- Transfer of private equity assets
- Checking derivative commodities
- Loan and mortgage records
- Trading management
- Microfinance application
- Maintaining records of customers
Data on cloud
One of the best ways to get a complete view of all customers and their in-depth profile and data is to transfer data of individual customers to the cloud. This will enable you to get a “360 degree” view of each customer.
Technologies like blockchain, artificial intelligence, and Internet of Things track the customer’s behavior and banking patterns. Technology helps in offering innovative products to customers that can be customized.
In order that the impact of digitalization is best availed, the business model ought to be restructured and that can make the digitalization process successful. With the help of newer technologies and incorporating knowledge management system, these banks must be able to offer the following-
- The regulatory compliance can be adhered to by building a platform that is open
- Offer customer interaction in real-time so that there is a better connect between clients and the banking management
- Optimizing and standardizing business processes after migrating to cloud solutions can be better managed and handled. Aside from that the processes also become way easier and simpler and less cumbersome.
- Introducing innovative technologies like IoT and AI as mentioned in the above paragraph.
Aside from the innovative measures that can be facilitated with the help of newer technologies, one of the major benefits is to curtail the incidence of fraudulent activities. In areas like international transfers, stack processes, network clearings, reconciliation, and auditing activities also benefit from implementation of knowledge based digitalization processes.
Author: Jimmy Simond
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