1. Financial Institutions of the future: Digital, virtual and omnipresent

Financial Institutions of the future: Digital, virtual and omnipresent

In banking, we are beginning to see the coming together of digital, data and social which is going to get us moving to the next generation of Banking.

New Delhi | Updated: February 12, 2015 1:10 PM

This article is a futuristic take on the Banking industry, which is no longer  considered to be traditional. Today this industry has witnessed the convergence of digital, data and social which is going to get us going to the next level of banking. Digital is providing an interesting trend of bringing “virtual personalization”  alive. This article by Usha Srikanth, Director Banking and Financial Markets Industry for GIC, Global Business Services, IBM India, illustrates the pathway on which banking is about to embark on as the future holds very interesting possibilities.

I settle down in the metro train for my commute to office which would take a 30 minutes. I wear my “banking glass”, blink a couple of times and lo behold get a view of my account position; an alert tells me I need to pay my bills today which I act on promptly; my Financial Advisor is on a chat, I turn up my audio on my glass and discuss options with my advisor and finalize the stock to buy; some investment options…  I get down from the metro train and walk across to my office and on the way tap my watch and confirm that the instructions given to my Financial Advisor have already been executed – This is “Banking on the Move” – a reality we expect we will be getting to very soon given the pace of innovation happening in the digital revolution through Wearable Technologies.. Westpac in New Zealand announced a pilot on Wearable devices with Google glass. The customers with Google glass can check balances, transfer funds, find the nearest ATMs and also get alerts and notification. Nationwide Building Society has launched banking on Smart Watches where customers can talk to the smart watch and get a view of their balance –   interesting examples of tapping the potential of digital revolution

In Banking we are beginning to see the coming together of digital, data and social which is going to get us moving to the next generation of Banking. This is happening today in pockets around the world. KAY Pay launched by Kotak is an example where one can send money to Facebook friends; There is a Bank in France which has enabled twitter money transfer. Fidor in Germany onboards new customers through Facebook. . As we go digital we are also seeing an interesting trend of bringing “virtual personalization” as we do want clients to interact with someone in the bank and not just a device. We see this move more specifically in areas where decisioning is required. When a client needs to select a bank or look at any form of large credit video link services are getting popular. Some banks in US are piloting with personalized ATMs with video tellers to assist the customer. All these are clear drives on bringing the bank to the customers’ doorstep instead of the customer going to the bank.

As we move through this one key element is the ability of the bank to innovate. We will see banks appoint their CIOs – Chief Innovation Officer and these would be people from across industries – technology companies, retail and telecom companies which are seen ahead of the game. Ability to innovate has to be balanced with cost of innovation. Today’s pilots have to get to be more and more affordable to be able to get the right returns as ultimately bankers are in the business of making money. Making technologies affordable is something which requires banks to work in close collaboration with research and in India with the plethora of startups this presents interesting possibilities. Simplification is another key dimension as the banks innovate. More options from the bank should not end up with more passwords to remember. The whole area of authentication of the customer is something which will go through considerable innovation. Exploiting the potential of biometrics may present very interesting possibilities. Simplification also requires linkage of the devices to provide more intelligent and unified client experience – Some industries are witnessing interesting shifts with the application of “Internet of Things- IOT” which is bringing together the devices in our ecosystem with respect to interlinkages, connectivity and a level of association. Applying IOT concepts to Banking will present us with interesting possibilities an area which is starting to gain the interest of some of the banks.

In summary we see a paradigm shift in Banking in the coming years. The move will emphasize a lot around innovation which lends itself to simplification and is also affordable. The changes will require the banks to approach Technology in a very different manner. Innovation becomes a necessity, Labs, collaboration with research just like one sees in other industries will gain popularity. Speed and agility will be more valued in the Banks than high end perfection when services are launched. We will see Banks emulate Google and Yahoo in their technology departments. While all this happens the rigor around risk and compliance; focus on stability and resilience will continue to be important. The bank which finds the ability to balance both and get to the art of possible will emerge as the winner.

– Usha Srikanth,
Director Banking and Financial Markets Industry for GIC, Global Business Services, IBM India

(The opinions expressed here are the author’s own )

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