Digital Banking III - How to get there?

Traditional banks are organized around money in branches.

• Their thinking,
• Their technology,
• Their incentive systems,
• Their knowledge about customers

are all structured around branches and product lines.

To become digital,

- Banks have to focus on electronic platforms and data as their core and branches as secondary.
- To get to an integrated electronic platform,  banks need to replace their old core systems.

Banks are shutting down branches
           - Europe closed 20,000 in the last four years.
           - Thousands have been closed in the U.S.
           - It has been predicted that banks will go from 1 branch per 20,000 customers now to 1 branch per 250,000 customers.
          - Banks will move to electronic channels where a transaction is much cheaper than one   performed by a teller.


Digital banking is more than getting consumers to use online or mobile banking or building a new app – it is a way to run an entire organization.

This new model touches product development, distribution, front and back office operations, marketing communication and the entire customer experience.



When engaging with a digital bank, consumers should benefit from the following:

• Shop for a financial institution online or with a mobile device
• Open a new account by using a computer, tablet or mobile device using image capture to save steps
• Communication with their bank through the channel of choice, potentially with live video tools
• Financial insights pre-login, such as balances, recent transactions and product recommendations
• Real-time and secure transactions online or at the point of sale with a mobile device
• Personalized and predictive offers that leverage geographic as well as contextualized insight
• Real-time digital money management including alerts and notifications
• Integration of financial services with daily activities.

Digital Maturity Model

Dell has developed a comprehensive Digital Maturity Model (DMM) to map a financial institution’s current digital state allowing an organization to develop a comprehensive action plan that is completely aligned to overall strategic goals.





 

Today's Complex - Payment System

TRADITIONAL PAYMENT SYSTEM

TODAY'S COMPLEX PAYMENT SYSTEM FOR END USER

 

 

 

Digital Banking - II

According to McKinsey Report,

Digital transformation will put upward of 30 percent of the revenues of a typical European bank in play, particularly in high-turnover products such as personal loans and payments.
• Banks can remove 20 to 25 percent of their cost base by leveraging this digital shift to transform how they process and service.
• Put together, the economics of a digital bank will give it a vast competitive edge over a traditional incumbent. It’s fair to say that getting digital banking right is a do-or-die challenge.

How to go digital without going crazy?

• Maximize the use of existing technology
• Apply lightweight technology interventions
• Place a few selective big bets

Address the people dynamics

• Set the right structure and incentives
• Increase the focus on business outcomes, not digital activity
• Formulate and implement a people vision

What exactly in the value of DIGITAL BANKING?

While the cost-saving opportunity for banks comes in many forms and touches every area of the bank, there are two areas that are especially significant and represent the bulk of the value:

• Automation of servicing and fulfillment processes and migration of front-end activity to digital channels. On automation, European banks can realize 40 to 90 percent cost reductions in a range of internal processes through careful deployment of work-flow tools and self-servicing capabilities for customers and staff.
• On front-end transformation, beyond diverting existing branch activity into digital channels, digital tools can also be used to augment frontline servicing (for example, with iPad forms rather than paper forms, or videoconference access to specialists to maximize their utilization)—easily doubling staff productivity and enhancing the customer experience.

In the near term, we expect shorter-tenure, high-turnover products like credit cards, loans, and payments to see the most digital transformation. In fact, these are the areas most under attack from new digital entrants.

Looking further ahead, bank accounts and mortgages, which together drive more than 50 percent of many banks’ revenues and usually provide “sticky” annuity streams, will be brought into the fray.

Digital Banking

“Digital” is the new buzz word in the banking sector, with banks all around the globe hopping onto the digital bandwagon.

Just like how the introduction of mobile technology massively disrupted innovation in the banking sector, digital is now doing the same.

Banks of all sizes are making sizeable investments in digital initiatives in order to maintain a competitive edge. So, what does “digital” actually mean?

That was the time, I was able to relatively to to distinguish between the sorts of

•    Internet banking
•    Online banking
•    Electronic banking

1. Internet banking would mean browser-based banking.
2. Online Banking means, It includes software or even telephone banking.
3. Electronic Banking, would mean the entire range of electronic payment and transaction processes including card terminal transactions.

And now, there is new contender, “digital banking” made a recent appearance and it looks like it is here to stay.

According to PWC, Digital Banking means,

"The full extent of what digital can offer customers goes beyond the basic mobile and internet banking services that are now widely provided, although there is still value to be obtained for many banks from simply delivering these basic services well.”

 “Digital banking will evolve into a richer set of offerings, providing new value for banks and their customers through a new ‘digital feature set’, based on innovations in:
         - User experience;
         - Mobile devices and
         - Networks;
         - Social media and
         - Collaboration;
        -  Customer analytics;
        -  Channel Ïntegration.”


“Digital Banking – a new concept in the area of electronic banking,
 which aims to enrich standard online and mobile banking services by integrating digital technologies,  for example strategic analytics tools, social media interactions, innovative payment solutions, mobile technology and a focus on user experience.“

According to ACCENTURE,

"Banks must reconnect with customers, rebuild trust and rethink the banking experience.
Digital technologies and solutions provide an excellent opportunity for forward-thinking financial institutions to move past this challenging market environment. If banks do not step up to digital, non-banking organizations will seize the opportunity to own the customer experience layer and provide alternate means of distribution. By having a truly digital business, banks can move away from reactive, transaction-based customer relationships, toward a more intimate, proactive and personalized experience across multiple channels, products and services"