Digital Banking – What Is It Really?

If you are a banker, techie, agent or most importantly a customer in BFSI part, I would take it for granted you must have heard the new buzz information “Digital Banking”. In my course of action, I did chat with several people and interestingly, no two persons seem to perceive this in same manner – well, this is kind of exaggeration, but you get the picture! This made me take a pause and think what this could average to someone like me who is an insider in the industry, to answer if a colleague, friend, or someone at my box asks me about this. As a true CrossFit athlete I follow at the minimum the first rule – tell everyone you come across about CrossFit.

The reason I bring up CrossFit is not just because of my fascination or, already obsession. CrossFit is a bit of complicate and daunting to those uninitiated, but to put it simply it is strength and conditioning program, which optimizes fitness. CrossFit defines fitness itself in terms of 10 elements – Cardiovascular Endurance, Stamina, Flexibility, Strength, strength, Speed, Agility, Coordination, Accuracy, Balance. But, typically if you ask any of your friends what is fitness, you might get multiple responses. E.g. a runner will say ability to run half-marathon, or a weight lifter might say deadlift of at the minimum 1.5 x body weight, or a guy into yoga might say doing 108 Suryanamaskaras. Well, each of them may be right in their own way. Your definition of fitness may be doing all of those, or you could just say I am fit enough if I am able to do my 9-to-5 job without taking any sick leave in an appraisal cycle.

On the same lines, edges could interpret Digital Banking in their own terms and similarly, people like you and me will have formed some opinion based on our own exposure.

Over the years, edges of all sizes and shapes optimized a lot by adapting to IT / ITES (IT Enabled sets) and they have achieved varied degrees of success. However, due to without of focused and longterm approach, creation of disjoined systems, rapidly changing business and operating scenarios, etc., the intended goals might not have been fully realized. Some of those “failed” initiatives could have been pushed by the institution’s urge to be an early adaptor of a technology or trend (betting on a wrong horse). On the contrary, we might lose a huge opportunity, if we don’t recognize and bet on a winning horse. So, the trick is betting on the right horse, at a right time – i.e., when the odds are low. Typically, industries use what is called a Hype Cycle to estimate a new technology or trend. If you are interested to understand what is a “hype cycle”, please see Gartner’s methodology. I will try to string together some of the meaningful aspects of Digital Banking, as unlike most of the buzzwords, it is neither a single service nor a technology.

Just around the time (2008-10) I spent about a year plus in Brussels, three big edges (Fortis, Dexia and KBC) which always came across as extremely risk averse bankers from the BeNeLux vicinity, started facing major pressure and their value deteriorated considerably and triggered heated debates in the community – who thought their money is always safe with the edges (either as a depositor or proportion holder). What really happened there, is very complicate. meaningful factors being, huge sovereign debt hovering between 84 to 99% of GDP, without of Government for 533 days, etc. These triggered liquidity issues. If you add to this other upheavals in the banking industry globally, it is easy to realize that the “trust” within the system was under threat. How would we build trust? By being transparent. Customers need (not want!) transparency in the whole system. Younger the customer base, that need felt is more acute. This, when you look from the changing customer experience and expectations from retail industry (Amazon, Flipkart), transportation (Uber, Ola), food industry (Zomato, FoodPanda, ZaptheQ), you know where the banking industry is. Customers have reset the expectations in terms of value, experience, and options. The meaningful takeaway for the banker – User Experience – high, uniform, mobile (anywhere), obtain, enhanced value.

Many people I have interacted with recently on this topic, opined Internet Banking or Mobile Banking as Digital. Yes, this is only the beginning of what could be Digital Banking. Probably, they cover earlier set of customer expectations. Moving on, could we see a day soon, where there is no paper in any of the banking transactions? When I say paper, I am not just referring to money! Few things which are already in practice in few edges and gaining momentum across are – digitizing processes within the bank (like customer on-boarding, loan application), cheque truncation systems which allows you to take a photo of the cheque on your mobile and send to your bank, etc. – there by bringing efficiency in decisionmaking, ability to customize processes to specific customer requirements, save some unnecessary trips to the branch, etc. This could average in other words, implementing document/ image management systems, business course of action management and monitoring systems, integrating these elements within the existing IT solutions. The meaningful – digitizing internal processes.

Social Media in the last few years have brought biggest impact across borders – be it, Tahrir Square dramatical change, Ice Bucket Challenge, which mobile to buy, how we order and pay for lunch or identifying a fine dining place and going Dutch while sharing the bill. Social Media is already bring disruptions in terms of which bank to trust, what they can expect from a bank in terms of sets, lend a voice to their dissatisfaction. Which in turn method, edges have to be on the same Social Media listening to their customers, selling their sets and also ultimately, attracting new customers, retaining the customers and more importantly, becoming “The Goto Bank” if the customer has multiple accounts. As an example, what could not have been expected few years back, in Kenya, one of our prestigious client’s Twitter manager (@ChaseBankKenya) uses Twitter to connect, set afloat and proportion CSR activities, and address customers’ queries and concerns very effectively. That is, The Reach factor.

Another silent thing happening behind the walls in a bank is called Data Analytics or Big Data. These churn out unheard of insights into customer behavior and preferences, driving extremely focused strategies. These also help customers to understand their use examination, plan their budgets, financial goal management etc.

except these meaningful elements, there are several others which could make the bank more “digital” – chat and video discussion facilities to bring bank closer to the customer when he/she needs it, or educating customers by online tutorials like financial literacy, tax planning, etc., integrating various solutions and systems in the bank to reduce data replication and redundancy and helping the bank make more Straight by Processing systems there by reducing errors, cost of operations, and increasing efficiency in the complete system. edges could considerably increase seamless data exchange with others partners like regulatory bodies, clients, government bodies consequently making complete course of action much more transparent and efficient.

Finally, the big question is what should be achieved from the big task list to call a bank “Digital Bank”? Just like in fitness, there is no single solution or the right solution. Each bank has to define its own strategy, execution plan to reach the goal of customer delight, operation efficiency, and overall proportion holders’ enhanced value.

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