While the pandemic and recent years have pushed banks into a ‘digital transformation journey,’ we must recognize the immense potential and opportunities that lie ahead.
During the pandemic, banks realized their services needed to reach customers even during lockdown.
Many banks have moved to the cloud, and for them, moving to the cloud has become a digital transformation.
Ensuring their channel banking platform remains up 24/7 became the priority for others.
Some others tried juggling with other channels like Phone or WhatsApp banking.
Unfortunately, though all these are needed, these activities alone can’t complete a Bank’s digital transformation.
It was more like missing the forest in search of the woods.
What is the definition of digital transformation?
In simple terms, digital transformation involves utilizing technology to create and execute innovative business models that enhance the customer experience and increase revenue by offering each customer personalized service—hyper-personalization at scale.
Rather than enhancing or developing traditional methods, the fundamental concept of digital transformation is adapting to new, futuristic, and innovative concepts and ideas to provide value to consumers and employees.
What banks are missing
Without a clear understanding of its objectives, a bank’s transformation in a rapidly evolving world with new technology emerging almost annually can be a daunting task. However, with the right knowledge and preparation, this challenge can be turned into an opportunity.
CLOUD, GEN AI, Metaverse, and Blockchain have been the most recent buzzwords in recent years. These gleaming objects frequently obfuscate an organization’s vision because people fear missing out.
Banks must undergo business transformation to provide customers with a digital experience.
The ‘What and How’ of conducting business has witnessed a significant transformation.
The ‘What’ refers to the products and services offered, which have evolved to meet changing customer needs. The ‘How’ refers to the processes and technologies used to deliver these products and services, which have shifted towards digital platforms and automation.
The ‘What’ section has remained unaltered.
For example, we purchase groceries, watch movies, and read literature.
Nevertheless, it is imperative to underscore that the sentence’s “how” has been modified.
We are ordering supplies through Amazon, watching movies on Netflix, and reading books on Kindle.
Consequently, MAAAN (Meta, Amazon, Apple, Alphabet, and Netflix) now provides a genuine digital experience. These services, including movie viewing, are accessible anytime and anywhere and offer a personalized experience.
I refer to this as the ‘Digital Experience,’ which encompasses all the digital interactions and touchpoints a customer has with a bank, from browsing the website to making a transaction. A seamless and personalized digital experience is a key goal of digital transformation.
Digital transformation is composed of four components:
- Understanding the true definition of digital experience and incorporating it into one’s personal context is essential.
- In the same vein, understanding the cultural perspective and ground realities of one’s organization is essential.
Banks must understand why digital transformation has been ineffectual or unable to achieve its objective at other banks.
There are WISE (W-Recognize, I-Integrate, S-Structure, E-Environment) issues that necessitate resolution in the context of digital transformation.
W- Recognize the rationale behind your actions: the fundamental issue your bank intended to address and the justification for its establishment. Suppose you are interested in assisting the MSME sector, assisting students in paying their fees and completing their courses, or addressing the financial challenges of a community. Are you solely providing them with loans or actively engaging in dialogue with them?
I – Integration with the external ecosystem. It is impossible to provide a comprehensive solution to the consumer independently in this era. Nevertheless, it is advisable to avoid completing every mission, as this could lead to the loss of your unique competitive advantage.
S – Organizational divisions. Your bank has grown over the years, incorporating many legacy systems. There is no need for concern; you are not alone. Similar challenges confront the preponderance of banks.
Frequently, numerous internal groups compete or occasionally cease communication with one another to become the bank’s “most profitable group.” In this regard, the CEO frequently functions as an intermediary.
E – Environmental and cultural factors. Are you encouraging your colleagues to take risks and experiment? The problem is that your customers will not be held accountable for your deficiencies.
Consequently, you must fail, acquire knowledge, and expand rapidly.
Furthermore, you must recognize and understand GENz’s requirements. Many of us have encountered physical branches and, as a result, Internet banking.
Nevertheless, GENz initially concentrated solely on the internet and mobile devices. They compare your website to other social media giants and assume you will provide the same level of service as your competitors.
- To transform one’s business, it is essential to understand and implement emergent technologies. Technology functions exclusively as an enabler. Avoid approaching any glittering object. You must thoroughly understand the appropriate technology to use and the underlying reasoning.
Banks need to prioritize ABCD in this context.
A – Artificial Intelligence, which can be used to automate processes and personalize customer experiences.
B – Blockchain, a decentralized ledger technology that can enhance security and transparency.
C – Cloud, a scalable and flexible infrastructure that can support digital services.
D – Data, the fuel for digital transformation, which can be used for analytics and insights.
- The expertise of Digital Anthropology, a field that studies the interaction between humans and digital technologies, can be advantageous to institutions in the context of cultural transformation, which is a component of digital transformation. Digital Anthropology enables understanding your consumers’ and team members’ subconscious minds and mindsets.
Subsequently, we cultivate an affinity for the content presented after observing what we find enjoyable.
Digital Anthropology can help you future-proof your digital transformation.
Benefits of Digital Transformation
Digital transformation offers a multitude of advantages. The following are a few noteworthy points:
- Improving the Customer Experience
As previously stated, the primary goal of digital transformation is to improve the consumer experience. Institutions must provide personalization on a large scale.
This requires understanding each consumer’s gender, preferences, unique challenges, deep-seated fears, interests, and constraints.
Consequently, they are obligated to develop products that meet the needs of those consumers. In actuality, N is equivalent to 1.
Artificial Intelligence and Big Data can be of substantial help in this context.
- Agility and Innovation
DevOps allows banks to reshape the market more rapidly by fostering innovation and agility than any other alternative.
At present, we are confronted with both exhilarating and challenging circumstances. Variable interest rate scenarios, new geopolitical challenges, and supply chain constraints are all present. Some countries are maintaining the status quo, while others are increasing or diminishing interest rates.
GEN AI allows you to acquire an exhaustive summary of all relevant data. Yes, the GEN AI engine can ingest, work, monitor, and listen to data on a global scale, 24 hours a day. Potential for Collaboration Among All Departments
Teamwork is indispensable for conducting an effective enterprise. When the entire crew of individuals collaborates and improves the work for your customers, the outcome will be truly successful. The unifying force that unites all members of your team in pursuit of a shared objective can be technology.
Banks must implement digital transformation to transition from antiquated processes and utilize technology to deliver exceptional service. There is a significant increase in the need for businesses to implement agile principles and improve their technological efficiency.
The extent of digital transformation is far beyond our capacity to imagine.
In the years ahead, banks willing to implement and transform digitally will experience more significant advantages and revenue than those still trapped in antiquated business practices.
