Digital transformation has become a need of the hour for all sectors, and a thriving banking sector is no exception! The entire BFSI sector has remained resilient to change giving preference to traditional paper-based processes for a long time. However, as competition increases and digital disruptions have become mainstream, many banks have started using digital transformation services.
The rise in online shopping, mobile-based transactions, and other concepts like cryptocurrency have made digital transformation in banking inevitable. On the one hand, digital transformation can give banks a competitive edge; on the other hand, it makes it possible to attract more customers. In this post, we will delve into the key factors that drive digital transformation in the banking industry and its benefits.
Before moving ahead, let’s understand the shift in paradigm from offline to online in modern banks.
Banking Sector- Paradigm Shift from Traditional to Online
Digital transformation is a key to success for any business these days. It optimizes customer experience, streamlines processes, and automates repetitive operations to save time and effort. However, the banking sector counted on its tried and tested methods based on papers and spreadsheets for a long time. This is a reason why this sector kept on delaying the paradigm shift from traditional to online methods.
Banking and financial services get many benefits from digital transformation. As per a recent survey conducted by Cornerstone Advisors, as many as 42 percent of financial institutions have said they have witnessed a 5 percent improvement in deposit account opening productivity. Other 33 percent have revealed that they have improved loan productivity by over 5 percent thanks to digital transformation in banking.
Today, most banks have jumped on the digital transformation bandwagon as their customers prefer digital channels for transactions. Mobile banking has become a norm as more customers use apps to address their daily banking needs. These factors contribute to the paradigm shift from traditional to digital. As per the MarketsandMarkets prediction, the market size of a global digital banking platform is expected to reach USD 13.9 billion in 2026.
Let’s dig deep into the factors that drive digital transformation in the banking sector.
Top Factors that Drive Digital Transformation in Banking
Before going through the major factors that drive digital transformation in banks, let’s understand what digital transformation means for this sector. Digital transformation in banking is an ongoing process of integrating technologies into operations to bring fundamental changes in the ways banks operate and deliver value. Digital transformation can give banks an edge over other competitors and make them ready for the future.
Let’s delve into the top features that drive digital transformation in this promising sector.
Customer Expectations
These days, tech-savvy customers want banking services at their fingertips using various gadgets including smartphones and even smart watches. Their approach and expectations compel banks to transform their processes digitally by delivering personalized experiences. Moreover, banks tend to offer products in a seamless way with higher security keeping the customer’s satisfaction at the core.
Advanced Infrastructure
As technology evolves, modernized infrastructure replaces the traditional one. Financial services use digital front-end operations with the help of robust back-end processes. In other words, the modernization of legacy infrastructure enables banks to transform their processes digitally and efficiently.
Rise in Data-driven Services
The BFSI sector largely depends on the customer’s data and analytics. New patterns and evolving techniques in analyzing the data can help banks understand the customer’s needs and behavioral patterns. It enables banks to bring more relevant services and customer-focused products.
Digitalized Market
Having digital capabilities is the first condition to survive and thrive in this competitive market. Be it business culture or strategies, banks need to initiate a digital transformation journey to grow in a digitalized market. As the consumer market is in favor of digitalization, digital banking transformation is essential for the BFSI sector.
Changing Model
Today, a hybrid experience that involves a combination of convenience and personalized touch in services is in demand. Every sector tries to fulfill the customer’s demands and expectations in a way that they feel a personal attachment to the product they use. Similarly, the banking and financial services sector has adopted this changing model by embracing digital technologies.
Here we mention some interesting applications that digital transformation services can offer to banks.
Interesting Use Cases of Digital Transformation
Online transactions have become a new norm especially during and after the pandemic age. Here are some interesting applications of digital transformation in the banking industry-
Frictionless Account Opening
You can be a bank customer in just minutes, not hours! Digital account opening allows you to open an account from your phone or PC with minimal information required. This frees up bank staff to focus on providing personalized advice and support.
Payments on the Move
Your Phone is your new wallet! Digital payments let you make secure transactions with a tap of your phone or a few clicks on your computer. Be it paying a bill at the restaurant, sending rent payments, or shopping online, everything is possible on the go.
Rise of Mobile Banking
Modern banking services do not demand a physical visit anymore. Mobile banking apps allow you to check your balance, transfer funds, view transaction history, and even contact customer service using smartphones. Moreover, customers can use these services on a 24x7 basis.
These use cases can save time and effort by streamlining various processes. Let’s make a list of the core benefits of transforming banking processes.
Key Benefits of Digital Transformation in Banking Industry
Beyond the convenience of online banking and instant transfers, digital transformation services bring revolution in the way banks operate and interact with customers. Here are some of the major benefits of digital transformation for the banking sector-
More Innovation
Digital transformation unlocks the potential of banking services through innovative solutions. It also enables bankers to cater to evolving customer needs and deepen engagement over the period.
Democratization of Banking
Digital platforms allow smaller investors to participate in exclusive opportunities in a customized way. In a way advanced technology further pushes banks to offer a wider range of services.
Enhanced Efficiency
Digitalization helps streamline processes and reduce operational costs, leading to a more efficient banking operation. It also increases engagement of employees and increase productivity.
New Business Models
Digital tools like social media integration and mobile banking apps create entirely new ways for banks to connect and serve customers. New business models involving crypto trading can give personalized experiences.
Seamless Services
Customers can access banking services anytime, anywhere through mobile apps and online tools. Digital transformation in banking makes it possible to open banks for 24x7x365 basis and customers can avail various services easily.
When it comes to getting scalable and reliable solutions for ensuring the expansion of banking services, it is imperative to choose the right digital transformation services provider.
Digital Transformation Services from Silver Touch for Banks
As a leading digital transformation company, we offer top-notch solutions based on 4P methodology- People, Process, Portfolio, and Platform. Our comprehensive digital transformation services can cover all aspects of the BFSI sector irrespective of the size and scale of the bank or financial institution. We assist banks in bringing automation through our digital innovation program. Our experienced professionals can integrate advancements of futuristic technologies like AI, ML, and IoT to build high-end banking software.
Banks can enhance customer and employee engagement to increase profitability using our digital transformation services. We also help banks improve customer services and launch innovative financial products to attract more people. Contact us to get a 360-degree strategy for implementing digital transformation solutions in your bank.
Concluding Remarks
Banks and financial institutions can expand their reach in the online world by embracing digital transformation. It helps banks streamline processes, improve customer services, and offer personalized experiences. A reputed digital transformation company can assist banks in leveraging the advantage of technology to increase convenience, efficiency, and security in a digital market.
FAQs
Why are banks going digital?
Customers want easy banking on their phones. Banks need modern systems and data to keep up.
Examples of digital banking features?
Opening accounts quickly with your phone, sending payments on the go with mobile banking apps.
What are the advantages of digital transformation for banks?
More innovation, easier access to banking for everyone, efficient operations, new ways of doing business, and always-available banking services.
How do banks benefit from digital transformation services?
Improved customer service, new banking products, automated tasks, and advanced banking software.
How can banks get started with digital transformation?
Partner with a digital transformation company for a custom plan that focuses on people, processes, what they offer, and technology.
