“No product is made today, no person moves today, nothing is collected, analyzed or communicated without some ‘digital technology’ being an integral part of it. That, in itself, speaks to the overwhelming, ‘value’ of digital technology.”
——Louis Rossetto, founder and former editor-in-chief of Wired magazine
The New Normal
The “new normal” is by far the most widely used phrase today as the behaviour of many has changed and will continue to be so even after the pandemic is over. This was a term used to refer to financial conditions following the financial crisis of 2007 – 2008 and the aftermath of 2008-2012 global recession. It has come to stay as we navigate our ways in the novel corona virus pandemic era.
A number of indigenous banks made lowly strides in the use of technology to activate processes of their delivery to customers. Many challenges have however, bedeviled banks in fully digitalizing, pre – COVID-19. A few are outlined below:1. Haunted by the ghost of legacy platforms:
For most banks, legacy infrastructure is the biggest challenge and highest hurdle to digitalization. Having been built up piecemeal over time, they allow banks to replicate certain parts of a given process online, but that is the limit to what they can achieve. They are the source of siloed information and siloed operations: the direct opposite of the agile, nimble digital processes banks will require. Their complexity and old-fashioned architecture are the reason for such immense maintenance spends. 2. Finding the right people to transform:
Digital transformation is a complex process, and you need specialists to become a digital bank. Finding the right people, who can guide through this transformation, is a real challenge for many banks.
Digital transformations are more about people than machines. Having the right individuals in place to lead the transition is a matter of honestly assessing your own capabilities and shortcomings. As technology continues to shape the way business gets done, placing your trust in people first will be your best strategy for success.3. Winning or maintaining customers` trust:
Trust is the essential prerequisite for widespread adoption of digital banking by customers; they must be sure that their identity will not be stolen, that fraudulent payments will not be made from their accounts, and that electronically-signed bank contracts retain the same legal value and validity as hard-copy contracts.
Just like legacy platforms, customers of a bank become fixated with traditional services provided by brick and mortar. This therefore makes it challenging to entirely change that with technology. In the event of retaining their clientele, banks will therefore tread cautiously on the digital transformation journey. They want to build a 100% trust for customers.4. Meeting regulatory requirements:
Banks must comply with increasingly stringent legislation associated with digital transformation. These requirements are instituted internationally and therefore pose challenges to indigenous banks who are already reeling under the tough internal regulations. They must also protect themselves from cyber-attacks, etc., to fulfill risk management obligations.
The challenge for banks to protect themselves against cyber-attacks and digital fraud is also a risk. Threats have become extremely advanced, and the attackers are smart enough to identify the kind of precautions that the banks can take, and they design their attacks accordingly. It’s something banks need to be well aware of.
The need for Digitalization of Banking in the “New Normal”
The new normal is here with us and banks are expected to navigate and get accustomed to it with deployment of technologies and digitized data in different ways in order to stay in competition. Consumers’ desire for digital banking services will most likely increase, forcing many traditional financial institutions to fast-track digital innovation efforts. The following can be considered:1. Greater investments in platforms supporting financial inclusion:
The digital economy is rapidly developing worldwide as the largest driver of innovation, competition and growth. Even though many people have been excluded, tremendous opportunities are available for the digital economy to support financial inclusion for sustainable economic development. Indigenous banks should by all means and at all cost invest strongly to make this a possibility in the new normal. Enough research should be carried out in this area in order to come up with the best innovation.2. Increased collaboration and investment in Fintech firms by indigenous banks:
Fintech has the potential to facilitate increased financial inclusion by enhancing access to financial services for those individuals and businesses that have been excluded from formal financial markets. Fintech companies are developing digital services that could result in millions of people having greater access to the banking sector and to new investment products. 3. Omni-Channel customer interaction:
A digital channels approach removes the dependency on physical contact and lets banks interact with their customers in a way that suits them best (mobile, online, Cards, etc.). Customers are also enabled to start an application online and continue it on another channel if they prefer. This multi-channel approach allows banks to extend the same strategy across business lines and geographies to create a consistent, reliable process that delivers the greatest customer satisfaction in these times and beyond.
About the Writer:
Ebenezer ASUMANG (CGIA) worked extensively in mainstream Banking & NBFIs. He is a Chartered member of the CGIA Institute, USA, a Google Certified Digital Marketer and an Author. • www.ebenezerasumang.com• firstname.lastname@example.org• 0242339145