Digital Banking, Like in every other sector, technology is accelerating progress in the banking & finance industry too. You’ve probably read a Revolut bank review, seen an ad about N26 or some new digital bank offering their services online. It’s expected that these kinds of banks are going to be more mainstream. Digitization in the finance sector is changing the way cash flows and transactions occur in an economy.
The advent of digital banking is transforming the baking sector forever. Two of the most prominent examples of dedicated tech implementations in the finance sector are real-time payments systems and digital banking. Both leverage the power of computer science, software & electronics engineering to transform the core financial services in an economy. Real-Time Payments systems and digital banking provide individuals, organizations, and financial institutions with dedicated & fault-tolerant transaction systems, end-to-end security, encrypted information transfer, and a host of handy microservices.
The importance of making critical technology decisions is vital for adequately dispensing digital banking services. Chief Information Officers from Yes Bank, a major private sector bank from India, cite the following reasons for implementing proper technology in the core, corporate and auxiliary banking systems.
- Offering several services at one’s fingertips: From secure payments to inter & intra account fund transfers, everything is just a tap away. Electronic wallets, e-statements, account information, application processes, and much more can be done from any authorized device, anytime, anywhere.
- Fewer errors, more accuracy, and better protection: Digital technology helps circumvent human errors and limitations. Data protection and security have become better and much more efficient.
- Enhance customer experience: User experience is a significant factor in the banking sector. Digital and online banking have changed user experience holistically. No longer does anyone need to stand in long queues, file loads of paperwork, or be physically present at all. Net and mobile banking have eased the process of all banking-related tasks and provide a hassle-free service experience from any location.
- Data Analytics & Business Intelligence To Boost Profitability: Governments and economies are encouraging banking institutions to augment operations and boost profitability. BI systems aid banks in understanding market trends and make accurate decisions to increase productivity, efficiency & profitability.
IT infrastructure and technology agenda is an indispensable part of the core banking system across economies. Legacy banking systems need to be digitized, and technological decisions play a vital role in digital banks’ success.
The following section looks at the disruptive tech trends, and tech implementation decisions can make or break a digital banking system in these times.
Tech Decisions For Successful Digital Banking
Renowned research firm, McKinsey, put forth certain essentials for any current digital banking system.
- Faster access to central systems and data that support the digitization
- Flexibility, agility, and faster response times
- Low-cost for scaling and operating core systems
- Services such as open banking, mobile banking, and other vital services
Such features require CIOs and the management to analyze the disruptive & potent tech trends affecting the banking industry. Careful decision making and calculated risk-taking are necessary to undertake multi-year modernization efforts. Such efforts come with lots of uncertainty and can be prone to failures or susceptible to poor ROIs & significant cost overruns.
A careful digitization strategy is a need of the hour for financial institutions to initiate successful digital banking measures.
Here are the core tenets of an effective strategy that can enable CIOs to make effective tech decisions.
- Improving With Data
Customer experience is paramount to the overall success of any digital banking endeavor. Gone are days of financial leveraging to create shareholder value. Digital banking allows banks to engage customers better, improve customer relationship management, and build better trust.
Proper digitization helps address customer concerns in a much more meticulous fashion. Digital banks need to integrate their services seamlessly by analyzing customer data and gaining meaningful insights from it. Understanding consumer preferences and observing their behavior by implementing the latest in data analytics can deepen customer relationships and open up newer revenue streams.
Technology decisions concerning the intelligent management of digital information are a significant factor that can make or break a digital bank. Data analytics is instrumental in enhancing customer experience and offering industry & competitor insights & defining customer segmentation.
Machine learning & data science programming help several sectors augment their services & operations, and the banking sector is no different.
- DevOps, Cloud, APIs & Microservices: The Four Tech Horsemen
An array of new technologies are now powering digital banking forward. According to Finextra.com, APIs, cloud architectures, microservices, and dedicated DevOps are indispensable for any successful digital banking endeavor. Banking executives state that advanced technologies such as these are the drivers of modern digital banking.
Cloud, Microservices, APIs, and DevOps ensure better agility, security, and resiliency for driving new banking business models. Investing in a dedicated IT infrastructure becomes essential as these technologies can affect every aspect of a digital strategy, including data, content delivery, business process, analytics, and user experience.
- Increase Focus on Security and Risk Management Tech
Digitization and online accessibility come with their fair share of risks. Given the sensitive and valuable nature of the information involved, enhancing security measures across multi-channel communications is of paramount concern. In a survey conducted by Banking Exchange.com, most correspondents emphasize improving security measures, enforcing dual control & authentication, and limiting access to the accounts as major tech security investments.
- Composable Banking & Gold Star Digital Transformation
The Covid-19 pandemic changed the way we interact with each other and the economy. Such drastic changes necessitate financial institutions to adapt and change to respond effectively to shifting customer & market dynamics.
Legacy systems and established banks adopt the ‘gold star’ approach to digital transformation, which involves a gradual evolution & changing of core banking & other systems over time. Instead of abrupt implementations and wide-scale knock-down & rebuilding, pinpoint transformation needs to be carried out at every level & area.
Composable banking is similar to the above approach to gradual digital transformation. In this approach, banks carry out rapid but flexible assembly of independent & best suitable systems by adding new technology. Banks should adopt this approach to bring about cautious digital transformation, new product launches, and pivoting into different service areas.
That rounds up this article on the vital tech trends that can make or break a digital banking venture. Come back next time for some more informative blogs on varied trending topics.
Suhana is a passionate blogger and digital marketing enthusiast. Suhana Williams is one of the most talented assignment experts who also provide APA citation generator through Myassignmenthelp. She enjoys the ever-evolving world of digital marketing and loves to share her opinion on every possible update with her audience. When not creating magic with her words, you can find her sky-diving or trekking in the most bizarre locations.