Digital Transformation in Banking & Finance
The future of financial functions directly depends on the correct combination of the latest relevant technologies and people who know how to use them – the main thing is not to lose this truth in the hurricane of decisions that appear every day.
Transformation in finance will be driven by skilled professionals who are highly adaptable and know how to achieve goals. Their engagement with digital financial technologies will be a big push for progress.
Fintech – Push for Change
There is no doubt that the transformation of the digital financial system will be a huge advantage for any entrepreneur who agrees to it, but it is important to be sincere in the process. As a result, the main thing is to take the first step, and then the train will move on its own.
To be successful in the digital revolution, CEOs must collaborate and connect their spaces to create new spaces to incubate ideas and applications from other fields and practices. After creating a comfortable environment for development, you can get an effective return on the process and initiatives.
One of the most obvious factors describing the growing need for a revolution in the world of banking and finance is the increase in consumer demand that must be met. Even before the COVID-19 pandemic, the decline in banking services began to be felt, and in 2020 it only accelerated and there was a need to develop and move into the digital world.
Growing Demand for Financial Technology
It is easy to see that in recent times, competition has emerged and increased between enterprises that were not usually included in the basic industry model, which could be provoked by the emergence of a large number of fintech companies in every corner of the world. Changes in the financial services industry are tremendous. Looking deeper, organisations focused on fintech and created on the basis of innovation bring not only improvements to the financial services industry, but also its destruction.
According to statistics, during 2015-2019, the demand for fintech services increased from 16% to 64%. It should not be surprising that in 2020 the trajectory continued its direction, taking into account the data on the growth of investments in fintech by 88%, and the number of payments made during the year increased by 49%.
Why are fintech companies so successful? They are based on the most powerful technologies – big data, cloud, artificial intelligence, and blockchain. By nature, people like things that make life easier for them, and in this regard, the evolution of fintech definitely takes the first place.
An EY survey was conducted, which showed that 96% have already explored the issue of money transfers and applications for transactions in the world of financial technologies. This speaks to the growing awareness of consumers and their interest – reinforcing the facts of the demand for higher quality services.
The main task of organisations involved in finance is to develop in step with emerging competition – adaptation to new conditions is very important. Meeting the new requirements that the evolving digital age has created is the main condition for the growth of the company.
What Happened After the Advent of Financial Transformation?
It is undeniable that banking digital transformation will bring not only benefits to banking and the world of finance, but also certain problems. To minimise the risk of failure or failure, you need to know how to handle financial transformation through internal efforts.
Impact of the New Financial System
After the emergence of the pandemic in 2020, a sharp decline in services provided in bank branches was noticeable. But such a problem was no longer new since according to a study, 25% of branches were already closed in the UK in 2012. If we turn to more specific figures, then in 2012-2020 the number of branches in the country decreased from 11,355 to 8,525. And this trend continues. The decline in the popularity of branches was even in the most difficult to maintain places in Europe – stimulation by the COVID-19 pandemic.
As we all know, there are age groups that seem to be avid and incorrigible fans of personal service in the department. They have felt the lockdown spurred on by the pandemic the most. For this reason, even such an unshakable position was shaken and made people think about the use of digital technologies.
The transformation of banking services has been taking into account the presence of the most vulnerable and unprepared segments of the population, which has become the main driver of rapid and effective changes in the digital world. Such a big jump in popularity is proof of the positive impact of technology on today’s society. This path must be followed by enterprises in order to grow further.
Destruction of the Traditional Banking System
Many new players have appeared on the market, which is literally destroying the financial sector. Due to the fact that many fintech companies have been created, banks and previous organizations have had to quickly adapt and engage in digital transformation within their company.
Competitors, seemingly completely unrelated to this industry, joined the game – Google and Amazon, which changed their traditional way of existence. For example, Amazon, which is a leader in e-commerce, has changed the focus of the company’s development and expanded into areas that relate to the banking industry and encroach on its revenues. But such organizations are at a loss to the finance sector to provide loans to small businesses and compete for prepaid card issuers.
A step back has to be taken not only because of the large number of competitors but also because of the pressure, which is regulatory and noticeably lowers the margin down. In this situation, enterprises have no choice but to develop and manage failures with the help of developing technologies.
Benefits of Fintech Coming to Market
It is undeniable that financial transformation has brought many benefits to those enterprises that know how to respond to it. The level of importance of digital transformation varies by sector. This is determined by the client’s request and what level of value the service will represent for him. Since the market is so saturated, it will not be difficult for the client to choose another bank in case his needs are not met.
Those processes that have succumbed to optimization after the introduction of the latest technologies are already giving their advantages:
- The fluidity of inter-team processes, resulting in better customer service.
- Increasing focus on applying the experience of employees to more complex tasks and legislation instead of managing processes that have been automated with the help of fintech.
- Investments began to pay off faster and problems were solved faster.
Companies can see digital transformation as a tool to increase agility. It has given them the opportunity to remove processes that are outdated and replace them with more interesting technologies – helping to reduce workload and increase efficiency.
Lack of Strategy – Big Catastrophe
Banking is based on processes and systems that have been formed over decades and have already become traditional. This puts banks in an uncomfortable losing position today when the world has had to deal with digital technologies. This levelled structure is not easy to replace and quickly adapts to changes. But, here’s the dilemma, adapting and evolving in the direction of technology is a must if banks are to stay afloat.
Unfortunately, attempts to avoid collapse and quickly get out of such a difficult situation will immediately lead to FAILURE. Without creating a strategy, the bank business may fail and the bank may loose its credibility. Hence, for finance digitilisation careful planning and strategic application of these plans are the most important factorscareful planning, applying strategies that work for the industry. Strategy is supported by the organisation, and every person working for the result is the key point not to waste money and time. Other industries have also transformed – banks and organisations can turn to digital transformation agencies to assist the process with a minimal chance of losing.
Internal Marketing in Digital Transformation
In proportion to the development of fintech, pressure on the financial sector and tightening from the FCA is growing. One of the ways to reduce the negative impact is to stop third party outsourcing and return it to the hands of bank employees in order to gain full control.
For example, getting a signature when outsourcing marketing efforts can take forever.
It is easier to start investing in digital transformation when the company does not play alone and internal marketing definitely helps financial institutions and banks. The use of internal marketing can have a positive impact on resilience in the face of competition and adaptation to fintech.
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