As new technologies drastically disrupt how financial services businesses operate, the banking industry is undergoing a massive phase of digital transformation. Artificial intelligence, machine learning, and robotics are dragging this sector into a new digital world.
Financial institutions must adapt and embrace this revolution to keep pace in a fast-moving business environment. However, many companies – particularly smaller institutions – are skeptical of the actual value of such a commitment. These firms should review and consider the several benefits of digital transformation in banking to better understand its long-term value to them and their customers.
What is Digital Transformation in Banking?
Digital transformation in banking refers to integrating various fintech technologies to automate, optimize, and digitize processes in the banking industry.
Eight Benefits of Digital Transformation in Banking
Digital transformation is revolutionizing business in almost every industry worldwide, but here are eight ways in which banks specifically can benefit from digitally transforming core systems:
- Increased Customers. Digitalization is necessary to increase customer bases and compete in any sector in today’s tech-heavy world, where people expect faster and faster results. These raised expectations include customers who demand fast-paced online banking solutions instead of slow and cumbersome traditional banking.
- A More Efficient Banking Process. Efficiency is critical in a society with huge premiums on speed and accuracy. Banking procedures are now much more straightforward and faster because of advanced digital analytics.Everyday banking activities impacted by digital transformation include the following:
- Deposits and transfers via smartphone mobile apps
- Electronic signatures without the need for physical printing
- On-the-go loan approvals without setting foot inside a loan office
- Automated bill pay to ensure customers are not late meeting monthly obligations
- More Data-driven Decisions. The more information any management team can collect, the better they can make solid decisions. The most critical choices are data-driven, and digitalization helps financial institutions make those tough (but well-informed) calls based on accurate and real-time data that best meets customer needs.
- Minimal Transaction Costs. Digital transformation promotes long-term cost efficiency by requiring fewer ongoing financial investments than conventional money exchange processes. For example, digitalization has made online, cashless transactions more accessible and straightforward, reducing the money spent on intermediary channels to deliver physical cash from one party to another.
- Enhanced Adaptability and Flexibility. In today’s banking and financial services industries, mergers and acquisitions are near commonplace. Historically, combining firms with differing physical systems can cause compatibility issues, which often cause havoc for both IT departments in question.However, cloud-based solutions do away with the necessary onsite systems, providing a smoother digital consolidation of business entities.
- Consolidated Data and Processes. Banks can use digital transformation to move from their legacy systems – often a patchwork of disparate technologies that don’t communicate data correctly – to a more user-friendly centralized system. This transition has multiple advantages, including:
- Smaller and simplified bank technology stacks
- Less expensive and time-consuming maintenance
- Standardized data across the financial institution
- Improved data accuracy
- Fewer to no time-consuming data transformation processes
- Improved Reporting Processes. Real-time, consolidated data is more immediately available, significantly improving how quickly and accurately banks can handle reporting. Financial institutions can keep an eye on changing trends, react promptly, and spot problems early in the process. These added insights allow senior management to generate reports themselves that would otherwise require IT’s resources to compile and format.Because generating these reports requires less time and workforce, banks can move employees traditionally responsible for compiling this information to more analytical roles with a more significant influence on the business.
- Automated Compliance Features. Digital financial management platforms provide financial institutions with automated compliance monitoring features. As a result, banks can afford to spend fewer resources on auditing. Data from legacy applications can be automatically standardized and delivered onto the new platform, decreasing the risks associated with manual inputs. The bank will also not need to address any new or revised regulations because these digitalized cloud-based systems receive compliance updates regularly.
Cask and ServiceNow Can Help Your Financial Institution Survive the Ultra-Competitive Banking Industry
Like most industries, banking is undergoing a powerful digital transition that shows no signs of slowing down. Financial institutions must explore the benefits of digital transformation in banking to create a plan to help meet evolving customer expectations.
Request a quote today and discover how a digital transformation with ServiceNow can help you compete in the high-paced banking industry.