The world is turning digital at a furious pace.
The world is turning digital at a furious pace. Most industries across the globe—financial services included—are grappling with Digital Darwinism, because both technology and consumers are evolving faster than they are. Research by McKinsey indicates that a digital strategy can boost profitability by 40% in the next five years, if it is effective, or erode profitability by 35%, if it is not. Clearly, digital transformation should be a top priority for banking leadership in 2016; however, our own research indicates that only 31% of companies believe they have a systematic digital strategy.
At Infosys Finacle, we have formulated what we believe is an effective strategy to help banks to become “truly digital”, and it starts with a change in mindset. Banks have to distance themselves from the old legacy trappings that continue to be the biggest barrier to transformation. Without that, any digital strategy will be superficial and ultimately ineffective.
In our view, a bank that aspires to be truly digital will have to embrace the following tenets:
Customer is the focal point
The truly digital bank has to help its digitally empowered customers to take control of their banking relationships and financial decisions. With the customer at the focus of attention, customer experience will become the key to successful differentiation. This will call for employing techniques like gamification and advanced technologies such as augmented reality to influence customer behaviour and improve experience.
Insight above all
Truly digital banks will leverage their wealth of information far more than their traditional predecessors, to gain insights into everything: from customers to operations to markets to security. Advanced analytics will help them build rich customer insights (both about the individual and the context there are in), which can be used to personalise the banking experience. A truly digital bank will use insights to be one step ahead of clients, and their current and emerging needs.
Automation at the centre of experience
Automation is a way for a truly digital bank to streamline its back-end operations. Moreover, automation is also a way to deliver a frictionless front-end experience as the number of interconnected systems increase. The challenge for the bank is to successfully navigate an increasingly connected “Internet of Everything” environment where machines are smart, businesses are intelligent, and devices are autonomous. This will raise questions such as how to influence devices, such as robo-advisors, which will increasingly assist human consumers in financial matters as well as help make certain decisions on their behalf.
The ecosystem as the universal bank
The truly digital bank will not try to do everything on its own. Rather, it will rely on an ecosystem of providers, who will collaborate deliver best-in-class experiences. The ecosystem will enable the bank to connect with other auxiliary networks and services, so it may extend the reach of core functions and add new competencies where required. The truly digital bank will be more open, thanks to APIs, apps and developer/partner ecosystems. It will believe in collaboration, co-operation and co-opetition.
But along with incredible opportunity, truly digital banks also stand to encounter some serious challenges. The rising incidence of cyber-attacks looms large. Banks need to secure themselves by staying compliant, adopting risk management best practices and enhancing their understanding both of the known risks as well as those risks that will emerge in the future.
As the market leader, Infosys Finacle is helping many client organisations to outline and define an effective strategy their strategy to become “truly” digital. In particular, we are working with customers on how they can refresh existing systems for greater efficiency and performance, while adopting new technologies such as mobility, analytics, cloud computing, block chain, and artificial intelligence. This enables banks to become truly digital, as well as solve unresolved problems, create quantum innovations, reimagine business models, and create new value for their customers and shareholders. This approach will help banks achieve sophistication from external stakeholders’ perspective, simplification from internal stakeholders’ perspective by being truly digital.
The writer is associate vice-president & head—product strategy & pre-sales, Infosys Finacle