back Back

Digital banking: Guess who could laugh all the way to the bank?

August 02, 2021

  • Cashless Payments
  • Conversational Banking
  • Digital Transformation
Share

Digital banking has reached such levels of disruption that the disrupted are unaware of disruptors racing ahead.

By Indranil Basu Roy, Chief Business Officer, Modefin

Next to the “new normal,” the most overused term could be digital banking. What’s the tipping point of technology or service delivery that makes a bank truly digital? Net banking? Yes and No, as its entry dates to an earlier era. App-based access? You must be joking. Cashless payments… now we are talking.

Indranil Basu Roy, Chief Business Officer, Modefin, Digital banking
Indranil Basu Roy, Chief Business Officer, Modefin

Let’s take one step back to understand digital banking. Over time, as fintech progressed from state-of-the-art, to cutting edge, to leading edge, services offered by banks migrated from conventional delivery channels to online.

Banks, in their eagerness to keep pace, ensured they incorporated every facet of digital banking in their ecosystem. Somewhere down the line, the music stopped. After all, customers were not complaining – no branch visits, no staying on hold in the helpline, no relationship manager to deal with – banking was no longer a chore but a breeze.

Not just retail or personal banking, the transformation had encompassed corporate banking as well, and had eased the procedures in document-oriented products such as Trade Finance.

Should we conclude that all is well, and congratulate the fraternity? Can we compliment the far-thinking CTOs and CMDs on their vision for digitization? Can we name the top 10 digital-driven banks and announce such other lists that make the jury glow and winners feel good?

If we do, we are falling into the trap that others have already got into. Let’s get this straight, digital banking has reached such levels of disruption that the disrupted are unaware of disruptors racing ahead.

As a banking institution, how do you gauge or ensure you are not left behind? Here are three test questions (don’t look for synergy, this is a random round):

  • How equipped are you to compete with a wholly-digital bank that does not have a single brick and mortar branch?
  • To enhance your digital capability, has your bank partnered with, or invested into non-financial players, such as a fintech enterprise, data analytics firm, mortgage-software start up or any other disruptor?
  • Here are five terminologies that are the latest in fintech applications: If you have to look up any, you are labeled “behind,” if you have implemented one or more you are “ahead.”

Here we go: Social Banking, Digital Queue, Conversational Banking, Peer to Peer Payment Systems, Facial Recognition Banking.

Assuming that banks cannot endlessly invest in technology (tech is not their domain) the answer is cross-industry collaboration with fintech players who focus on agile solutions. If the engagement process gets further delayed, the next wave will be fintechs playing the role of banks in certain product areas (we already have several online lending platforms which are not backed by a bank). Look closely, lending platforms of today are replicating services that banks pioneered five years ago by offering instant loans based on a review of credit history.

Looking back, IBM, the one-time mainframe behemoth, proved elephants can dance by making a dramatic turnaround in the mid-1990s. Now is the turn of mammoth banks to appreciate that digital transformation calls for more than online banking. If not, they may as well recall the story of a humble ant that troubled the mighty elephant by entering its trunk (can’t think of a better disruptor-disrupted metaphor).

Beyond folklore and stories of yore, here’s a reality check reflected in a research report on ‘Digital Banking in Asia,’ published by Mckinsey & Company:

“The disruption caused by digitization can create or destroy significant value for banks, depending on their starting positions and how well they respond to shifting consumer behavior and other trends. Experience is showing that 30 to 50 percent of net profit is at risk.”

The findings are disquieting. Rather than assuage your anxiety, I end with a call to action. Start with an audit of your bank’s digital platforms and products, benchmark against the best in the industry, get to know where you feature, and get to work on greater transformation.

If the fraternity fails to keep pace, faster adapters, disruptors and other innovators will get ahead. No marks for guessing who could laugh all the way to the bank.

Leave a Reply

Your email address will not be published. Required fields are marked *

Previous Article

July 19, 2021

AI is transforming financial services

Read More
Next Article

August 05, 2021

It’s time for banks to get their heads into the cloud

Read More

IBSi News

Payments, Payments as a service, Canada

September 24, 2021

Cashless Payments

The 4 most used apps in Canada revolutionizing the Payments medium

Read More

  • Daily in-depth news analysis
  • Weekly chart curated via IBSi research
  • Exclusive weekly Financial Technology use case

IBSi FinTech Journal

  • Most trusted FinTech journal since 1991
  • Digital monthly issue
  • 60+ pages of research, analysis, interviews, opinions, and rankings
  • Global coverage
Subscribe Now

Other Related Blogs

July 09, 2021

Debunking digital banking myths

Read More

June 08, 2021

FinTech lessons banks need to learn to be digital-first

Read More

May 14, 2021

Huawei: How smartphones are driving a global FinTech boom

Read More

Related Reports

Pages

Bank-wide
Core Banking Market Dynamics Report 2021

£2,000 / year

Know More

Pages

Market Reports
US Financial Services Technology Report 2021

£1,500 / year

Know More

Pages

Retail Banking
Core Banking Market Dynamics Report 2021

£2,000 / year

Know More

Pages

Wealth Management
Wealth Management & Private Banking Systems Report 2021

£1,500 / year

Know More

Pages

Wholesale Banking
Treasury and Capital Markets Systems Report 2021

£1,500 / year

Know More