With the rise of the internet in the 1990s, the banking industry started to undergo a fundamental shift in the way they conduct business. Customers started to increasingly use online channels to conduct transactions, a trend that only snowballed with the improvement of network connectivity and the rise of smartphones. As new technologies like RFID (radio frequency identification) and NFC (near field communication) gained widespread use resulting in the proliferation of contactless payment systems, the banking industry has officially entered a new era of innovation and experience – the era of digital banking.
What is digital banking?
Although digital banking started simply as the provision of banking services over the internet, today it is so much more. Digital banking now involves the adoption of technology at all functional levels of the business, thereby resulting in an improved front-end experience (where the customer interacts with the bank), an enhanced back-end system (that allows the bank staff to perform their tasks and processes smoother), and robust middleware that connects the two, creating a smooth and seamless interaction between the consumer and the bank.
Why is digital banking important?
Digital banking creates new opportunities and avenues to develop stronger relationships with customers through improved processes. The key advantages of going digital are:
Technology can help banks automate aspects of their process to reduce redundant actions and human error. As a result, customers can conduct transactions faster and with less effort, and employees and managers can focus on improving tasks that require human intervention.
2. Cost savings –
A more efficient process would naturally translate into reductions in costs for the bank as well as the customer. Through the reduction of human error, going paperless, and more, banks could save a large percentage of their traditional costs. The efficiency gains from the process improvement would also allow for faster responses to changes in the market, resulting in further savings.
3. Agility –
Through software solutions, banks can become nimbler and quicker to adapt to market and regulatory changes. Tasks such as compliance and risk assessment can now be managed through technology, allowing the banks to stay current and provide the most effective solutions to their customers.
As banks start to fully integrate digital solutions into their processes, and with financial technology startups booming, customers are now spoilt for choice when it comes to services and options. Digital banking is no longer in its infancy; banks must move quickly to transform their businesses and make sure they are ready to deal with the new technological shifts in the financial sector, in order to provide the solutions and services their customers are looking for.
We’ve successfully worked with several clients to digitally transform their business. To learn more about Penser’s approach to digital transformation, visit our Services page.
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