Over the past years, many industries have radically changed, and banks are one of them. However, not many strived for successful growth strategies using digital solutions, but those that thrived to emerge as digital leaders and grew their businesses gained Wall Street recognition.
Today the banking industry is called to find new and innovative ways to avoid becoming a back-office utility. Digital Transformation comes to the rescue and helps them to be relevant all the time, especially regarding customer experiences.
There is a new kind of company that started to disrupt the digital sphere introducing financial technology into their operations. We are talking about the Fintechs, those companies that base their business on financial technologies. Some countries have even seen the emergence of the so-called “challenger banks”, that are those digital banks that focus their services around exceptional customer interactions. These banks have reduced costs and streamlined processes that provide unique customer experiences.
The banking industry’s digital transformation is empowered by different financial related technologies such as blockchain, big data, machine learning, and artificial intelligence. For example, big data is greatly used to impact the customer journey and to make informed decisions.
The banking industry is, in fact, one of the most data-driven industries. Big data and the other innovative technologies named before provide a great opportunity for banks to outperform the competition because they can be used to map the customer journey and gain competitive advantage. Many banks are currently using blockchain technology to improve their business processes, to reduce fraud, to ease different kind of payments such as peer-to-peer or cross-border payments. Other financial institutions use digital technologies to manage trade, to offer microfinancing opportunities and to keep mortgage and loan records. For example, blockchain can reduce cross-border payments from 6 days to minutes improving customer experience and lowering the cost of transactions. Machine learning is helping financial institutions to automate manual processes or to segment customers’ activities.
Through digital, banks can grow and stay relevant in three different ways. First, they can deploy cheaper and improved versions of their existing services or products. Second, they can generate more revenue identifying new products for existing customers, adding extra value to their services. Third, digital allows banks to expand their service offer beyond banking.
Digital transformation is a huge opportunity for those banks that are prone to take risks and unveil the challenge of a digital-driven growth.