{"id":22756,"date":"2021-04-21T08:23:00","date_gmt":"2021-04-21T08:23:00","guid":{"rendered":"https:\/\/www.experfy.com\/blog\/digital-transformation-banking-finance\/"},"modified":"2023-08-24T14:02:31","modified_gmt":"2023-08-24T14:02:31","slug":"digital-transformation-banking-finance","status":"publish","type":"post","link":"https:\/\/www.experfy.com\/blog\/fintech\/digital-transformation-banking-finance\/","title":{"rendered":"Digital Transformation in Banking &#038; Finance"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"22756\" class=\"elementor elementor-22756\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"has_eae_slider elementor-section elementor-top-section elementor-element elementor-element-3fea140 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"3fea140\" data-element_type=\"section\" data-e-type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"has_eae_slider elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-3508a13\" data-id=\"3508a13\" data-element_type=\"column\" data-e-type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-b17b1c4 elementor-widget elementor-widget-text-editor\" data-id=\"b17b1c4\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>\ufeffThe Covid-2019 pandemic takes all spheres of everyday routine to the next level. Following the latest digital banking news, financial organizations are forced to transform their workflow and deliver a high customer experience. The industry professionals see salvation in digital transformation \u2014 an integral part of the global economy of tomorrow.<\/p>\n<p>Avoiding top-notch business approaches, banks and financial organizations risk losing customers and money. That\u2019s because you don\u2019t have the opportunity to work quickly and efficiently. Let\u2019s imagine that a bank has 1,000 loan applications, and two weeks to approve or reject them, and issue loans. While its competitor implements digital solutions shortening the lending time, for example, in half. In addition, their clients won\u2019t need to wait in lines and so on. So, who will win customers?<\/p>\n<p>According to Deloitte, about 30% of respondents indicate \u201ccreating digital capability\u201d as their main strategic initiative in 2020. While <a href=\"https:\/\/www2.deloitte.com\/us\/en\/insights\/topics\/digital-transformation\/digital-transformation-survey.html\" target=\"_blank\" rel=\"noreferrer noopener\">45% of companies report a positive impact of digital transformation<\/a> and note higher growth in net revenue.<\/p>\n<p>But what is digital banking itself? To put it briefly, the transformation introduces technology to the business processes and services of a financial institution, allowing them to deliver all their operations online. The common types of digital banking include:<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-47c71a1 elementor-widget elementor-widget-text-editor\" data-id=\"47c71a1\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<ul><li>Account checking and management<\/li><li>Applications for financial products<\/li><li>Merchant services<\/li><li>Online bill payment<\/li><li>Business and personal loans.<\/li><\/ul>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-c45cc08 elementor-widget elementor-widget-text-editor\" data-id=\"c45cc08\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Digitalization offers much more than just additional channels of online banking services. Within a financial institution, digital transformation comes from the fundamental reform of internal and business processes paired with excessive training of employees. But most importantly, it leads to a mindset shift in the banking sector\u2019s methodology. It\u2019s safe to say that the true meaning of change lies in a modern way of delivering value and driving revenue. For customers, new banking technology brings out a personalized customer journey where all the steps are integrated into a single platform online.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-7e7a5a3 elementor-widget elementor-widget-heading\" data-id=\"7e7a5a3\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Consumer Journey Shift<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-7989e49 elementor-widget elementor-widget-text-editor\" data-id=\"7989e49\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Modern customers, with Internet-savvy Millennials as the dominant group, are one of the main advocates of digital banking. They interact with different businesses in various ways, including those that have already begun to transform their working processes. In such cases, clients witness the speed of service and therefore expect the same level of convenience from other enterprises. Deloitte claims that <a href=\"https:\/\/www2.deloitte.com\/content\/dam\/Deloitte\/cn\/Documents\/financial-services\/deloitte-cn-fs-accelerating-digital-transformation-in-banking-en-190515.pdf\" target=\"_blank\" rel=\"noreferrer noopener\" class=\"broken_link\">84% of clients use online banking<\/a> while 72% access their primary bank via mobile applications. Nessa Feddis, senior vice president at ABA, comments on the new cashless reality: \u201c<em>As fewer people carry around cash and checkbooks, more and more consumers are turning to mobile payment apps to split a tab, send money to family or even pay their rent<\/em>.\u201d<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-75e0e3a elementor-widget elementor-widget-text-editor\" data-id=\"75e0e3a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"http:\/\/www.experfy.com\/blog\/wp-content\/uploads\/2021\/05\/KvQ8VZV5Za2BkSebRPASh20s4zJOZg7WrfvLqQKR17syhDqZHJcRlxr1gorRtX2f_Xy-kOT7HpacT9tPBIn_9UWfRs7gypsmkM46PHc58jgca8LBaQvm-stofZwc_6qoqaqfxfb3.jpeg\" alt=\"Customer Journey: Traditional vs Digital Bank\"\/><\/figure>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9755064 elementor-widget elementor-widget-text-editor\" data-id=\"9755064\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Digitalization paves the way towards the adoption of the customer-centric approach. Using technologies, banks can predict and address clients\u2019 demands at any stage. The Commonwealth Bank in Australia, for instance, developed an AR application that serves as an AI-driven real estate agent. Using the camera in their smartphones, clients \u201cscan\u201d a building and get its price and sales history on their screens. The CommBank Property app also comes with a <a href=\"https:\/\/hesfintech.com\/mortgage-loan-software\/\" target=\"_blank\" rel=\"noreferrer noopener\">mortgage<\/a> calculator and the possibility to contact local real estate agencies. The solution perfectly describes the idea of a personalized customer journey on a single platform online. And, according to the number of downloads \u2014 over 100,000 \u2014 Australian customers fully appreciated the innovative approach.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-0615a45 elementor-widget elementor-widget-text-editor\" data-id=\"0615a45\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"http:\/\/www.experfy.com\/blog\/wp-content\/uploads\/2021\/05\/lH7y3XTvIS-_FUMtFtLEkDY71v8VP_VObui-mtsZeGmiXszX4xtDhcN2yUMHtPn18gEmsF5enIMyKKRql3efZU7ax8YROpU0Cl6dBccXucIrqSfDEa6i91kZdPtK-GKyrHyRuWMn.jpeg\" alt=\"Digital Transformation In Banking &amp; Finance\"\/><\/figure>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9efc4d6 elementor-widget elementor-widget-text-editor\" data-id=\"9efc4d6\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The needs of the growing SME sector are also important as these ventures represent the biggest part of businesses worldwide. According to World Bank SME Finance, <a href=\"https:\/\/www.worldbank.org\/en\/topic\/smefinance#:~:text=SMEs%20account%20for%20the%20majority,(GDP)%20in%20emerging%20economies\" target=\"_blank\" rel=\"noreferrer noopener\">SMEs account for 90% of businesses and more than 50% of employment globally<\/a>. In the US private sector alone, 30 million SMEs accounted for about 65% of new jobs in the last decade. Their basic needs range from account opening to online account balance control, and everything in between. They want those services to be fast, easy, and online. In consequence, SMEs address fintech and neo-banks to support their financial activities. Therefore, to keep up with the growing competition, banks have to be qualified to assist SMEs through advanced digital banking services.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e805d26 elementor-widget elementor-widget-heading\" data-id=\"e805d26\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Digital Banking Innovation in Big Data<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4f5b792 elementor-widget elementor-widget-text-editor\" data-id=\"4f5b792\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p><a href=\"https:\/\/www.networkworld.com\/article\/3325397\/idc-expect-175-zettabytes-of-data-worldwide-by-2025.html\" target=\"_blank\" rel=\"noreferrer noopener\">IDC study<\/a> claims that by 2025, the global amount of data will exceed 175 zettabytes (175 trillion gigabytes). The manufacturing industry and financial sector are recognized as the most promising ones for Big Data usage. Doug Laney, a renowned data analyst, formulated three basic components that describe data in banking:<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-a17dae9 elementor-widget elementor-widget-text-editor\" data-id=\"a17dae9\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<ul><li><strong>Diversity.<\/strong> Banks have to deal with a huge amount of different types of data. The data ranges from small details in transaction history to credit points and risk assessment reports from banks.<\/li><li><strong>Speed.<\/strong> The speed of adding new data to the database. This point is vital as it is not unheard of for a respectable bank to reach the threshold of 100 transactions per minute.<\/li><li><strong>Volume.<\/strong> The amount of space that this data takes for storage. For instance, huge financial institutions such as the New York Stock Exchange generate terabytes of data daily.<\/li><\/ul>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-c2c42a6 elementor-widget elementor-widget-text-editor\" data-id=\"c2c42a6\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>The most common data use cases in banking are:<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-ca7d763 elementor-widget elementor-widget-text-editor\" data-id=\"ca7d763\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<ul><li>Definition and analysis of customer expenses\u2019 structure<\/li><li>Detection of the transactions\u2019 main channels<\/li><li>Dividing customers into segments based on their profiles<\/li><li>Cross-selling products<\/li><li>Management and fraud prevention<\/li><li>Risk assessment, compliance with safety requirements, and reporting to the regulator<\/li><li>Analysis and response to customer reviews<\/li><\/ul>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e66b0ca elementor-widget elementor-widget-text-editor\" data-id=\"e66b0ca\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>Accuracy and predictability are especially vital for the domain of lending. With data analysis, banks and credit unions can identify more business opportunities and reduce costs. The industry has come to realize that borrowers represent much more than just their credit scores. So it\u2019s important to take into account alternative sources (i.e. behavioral triggers and spending patterns) to determine their financial eligibility. As a result, the use of data analytical tools welcomes underbanked borrowers with thin file profiles that the traditional credit score system would certainly reject.<\/p>\n<p>The opportunity to predict a borrower\u2019s creditworthiness while originating a loan becomes the first step towards running a profitable lending business. It\u2019s all about the decision-making economy \u2014 to outperform competitors, businesses have to make insight-driven decisions in real-time. That\u2019s why big data is playing an increasingly starring role in the lending domain including auto finance, mortgages, as well as business and personal loans.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4ef8cdb elementor-widget elementor-widget-heading\" data-id=\"4ef8cdb\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">Issues towards Banking Transformation: Fighting the Old System<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-1e4583a elementor-widget elementor-widget-text-editor\" data-id=\"1e4583a\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<p>According to <a href=\"https:\/\/worldretailbankingreport.com\/resources\/world-retail-banking-report-2020\/\" target=\"_blank\" rel=\"noreferrer noopener\" class=\"broken_link\">the World Retail Banking report<\/a>, 28% of banks see <a href=\"https:\/\/www.experfy.com\/blog\/bigdata-cloud\/fintech-in-the-banking-environment\/\" target=\"_blank\" rel=\"noreferrer noopener\">FinTechs<\/a> as competitors since they misunderstand the essence of fintech development. Financial institutions resort to separate digital initiatives with little success because they lack the expertise and technical skills to accomplish it on their own. As a result, they are either disappointed in digital transformation banking or lag far behind their competitors.<\/p>\n<p>However, 65% of retail banking execs see them as partners instead of competitors. Through partnerships and acquisitions, banks will form strategic alliances with fintech to offer Banking as a Service (BaaS). That\u2019s logical \u2014 while fintechs have innovative ideas, the challenge lies in the implementation of the appropriate technology and choosing a digital banking strategy. A dedicated technological partner provides synergy and agility that result in a coherent integration with current systems and products.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/hesfintech.com\/blog\/digital-transformation\/\" target=\"_blank\" rel=\"noreferrer noopener\">https:\/\/hesfintech.com\/blog\/digital-transformation\/<\/a>&nbsp;<\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>What is digital banking itself? To put it briefly, the transformation introduces technology to the business processes and services of a financial institution, allowing them to deliver all their operations online.<\/p>\n","protected":false},"author":1109,"featured_media":19201,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[192],"tags":[132,265,982,99],"ppma_author":[3662],"class_list":["post-22756","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fintech","tag-banking","tag-digital-transformation","tag-finance","tag-fintech"],"authors":[{"term_id":3662,"user_id":1109,"is_guest":0,"slug":"dolgorukov","display_name":"Dmitry Dolgorukov","avatar_url":"https:\/\/www.experfy.com\/blog\/wp-content\/uploads\/2021\/05\/Dmitry-Dolgorukov-150x150.jpeg","user_url":"https:\/\/hesfintech.com\/","last_name":"Dolgorukov","first_name":"Dmitry","job_title":"","description":"Dmitry Dolgorukov is a Co-Founder and a CRO of <a href=\"https:\/\/hesfintech.com\/\" target=\"_blank\" rel=\"noopener\">HES FinTech<\/a>,and CEO at <a href=\"https:\/\/ginimachine.com\/\" target=\"_blank\" rel=\"noopener\">GiniMachine<\/a>- an AI-driven platform that solves traditional credit scoring challenges with machine learning algorithms. He is a member of the Forbes Finance Council since 2020. He was ranked as one of the most influential AI leaders in Eastern Europe in 2019, and as one of the top 200 Fintech leaders in Europe in 2018."}],"_links":{"self":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts\/22756","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/users\/1109"}],"replies":[{"embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/comments?post=22756"}],"version-history":[{"count":4,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts\/22756\/revisions"}],"predecessor-version":[{"id":31479,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/posts\/22756\/revisions\/31479"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/media\/19201"}],"wp:attachment":[{"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/media?parent=22756"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/categories?post=22756"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/tags?post=22756"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.experfy.com\/blog\/wp-json\/wp\/v2\/ppma_author?post=22756"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}