Digitalization: Think Outside The Bank
So many complex articles on banks digitalization strategies and the future of banking!
Let me summarize in a nutshell what bank's digital strategy should be:
Create a technology ecosystem to gather meaningful data that will allow innovations to grow the bank's business.
As simple as it can get, no need for more complex , lengthy and $$$ definitions!
The keywords here are technology ecosystem and data.
So, the digitalization strategy is not just about good looking apps. It is about creating digital channels (good looking apps!) providing meaningful data that allow innovations leading to the creation of new services and increase in market share.
The bank needs to team up with the right technological partner(s).
In today’s world, these newly created services should be beyond the traditional banking ones, ie deposits, loans, checks, balances, account creation, …..
A quick example of FintekMinds working with a regional bank: After analyzing some of their data with a 'very interesting analytical tool', we identified recurring issues with a specific segment of corporate clients. They were generating a very high number of costly breaks in their transactions processing. This was a cost for the bank, not generally accounted for, and a surprise to the management.
It was decided that it is worth reaching out to this segment of clients in a pro-active way and offering a service to reduce the breaks.
The bank now has a deeper knowledge of the clients' operations. It helped them optimize their back-office transactions processes and reduced its own cost of operations.
It was a complete win-win situation that was not possible without the adequate tool and partner. The customers are happy with the service and the bank became "indispensable".
Now the bank is adapting the same tool to analyze other areas with their customers where they can make a difference.
The common sense was to start using the bank's knowledge (in this case back-office process optimization) to provide solutions to external parties other than the traditional banking operations. These solutions were triggered after analyzing the data with the right tools coming from multiple digital channels.
And banks have knowledge well beyond traditional operations... but only applied internally... waiting to be unleashed...
Thinking outside the bank !
The future of banking is not in traditional operations only. These will be taken over in bits and pieces by other types of institutions (mainly Fin-tech companies) and only large banks will be able to survive this evolution (think about the PSD2 directive).
Banks need to evolve and should be tightly involved in the daily operations of individuals, small businesses and corporate.
Banks should become the One-Stop-Shop for individuals and corporate for their business and financial transactions.
It would be ideal if the bank could provide individuals and business owners with services like:
Treasury & liquidity management
Imagine the information collected by the banks on user/business behavior if they succeed in achieving that...
The digitalization strategy should lead to this.
A bank that is completely involved in your daily activity can only be a winning bank.
A bank where offerings stop at traditional services , copying the others in building nice apps without going further, is very easy to replace.