Sustainable Digital Transformation in Banking: Recipe for Zero-Rush Bank Transformation

Put simply, the goal of digital transformation is to incorporate computer technology into business processes, strategies, and outputs. Organizations undergo digital transformation to enhance services, improve customer and employer engagement, and to become get an edge in competition. And, unsurprisingly, many banks are already in the process of digital transformation by collaborating with banking software development companies. For many of them, automation and digitalization come at a cost of adjustments on the back-end side of the solution. Like never before, banks must provide a complete digital customer experience to compete with digital-native businesses.

In one too many cases, banks fail to carry out independent digital transformation due to the lack of support and coordination required to compete with digital-native solutions. Some of them, however, launch a top-down digital banking transformation strategy that includes incorporating digital systems, customer experience platforms, apps, and infrastructure and succeed.

Binariks can set you on the proper path to planning your own bank's digital transformation journey, even if a digital transformation in banking entails code refactoring and integration of financial systems.

The importance of digital transformation in banking

The banking sector is changing. Banks are trying to meet customer expectations and preferences. Cash? Checkbooks? Millennials don’t use those. That’s why there is a growing need for electronic payment systems development . The importance of digital transformation in banking might be overshadowed by consumer frustration with antiquated banking and payment procedures. Banks that don't keep up with technological advancements may be more challenging to operate, costly, and less accessible to customers who prefer digital alternatives. On the contrary, banks that use modern technology to streamline their operations and give people and companies access to vital financial sources continue to grow.

Digital transformation in investment banking

Investment banking is concerned with business and large quantities of money, which occasionally may result in even bigger losses for a bank or other financial organization. Due to the intricacy of fraud schemes and the fierce competition in the fintech sector, investment banking is bound to fail without clever digital transformation.

Digital transformation in retail banking

Retail banking, which works with the B2C sector instead of investment banking, has its challenges and quirks that may be readily resolved with the right mix of software and hardware.

The risk of traditional banks turning obsolete

With the advent of fintech companies that are providing the newest technology to customers, we have discovered crucial factors that are making it difficult for large banks to compete. We'll go in-depth on how banks may work to address these six difficulties in this whitepaper.

Major banks are plagued by antiquated technology systems called "legacy systems" that are sluggish and incompatible with current technology.

Open banking and integration

Customers want tools that make it easier to connect different accounts and have access to cutting-edge capabilities and features that provide them more insight into their finances.

Speed and agility

Neobanks' small, agile teams enable them to react more quickly to new developments in the market. The new competitors might enter the market with little to no warning, making it challenging for conventional banks to make swift changes.

Specialization

The majority of conventional banks serve a diverse clientele, making their goods and services accessible to the typical customer. Smaller, more nimble businesses are better equipped to concentrate and focus on more specific market sectors.

Additionally, we have a detailed blog post on digital transformation in financial services .

Benefits of digital transformation for legacy banking solutions

We outline the major advantages of digital transformation in banking to financial institutions:

Improved security on all levels

Data encryption protects banks from internal and external information breaches by fraudsters and rivals. Most significantly, it makes transactions more secure.

Faster operation and lower waiting time

Customers dislike waiting, mainly if they trust your bank with large quantities of money. Microservice-based design for large data processing systems ensures quick and secure transaction processing.

Better analysis and risk management

If you have effective fraud detection systems, you will decrease the chances of fraud. Additionally, multiple-level validation of transactions will obviate any potential errors your customers and employees make.

Predictive capabilities

Your ability to succeed financially depends on your ability to foresee the issues and changes that will affect your market in the future. It will be easier for you to prepare in advance if you have reliable knowledge of various potential events, from minor disruptions to a major decline in the world economy. By doing so, you may move your company to a different, more promising, and lucrative sector before your rivals and implement winning fintech solutions ahead of them.

Customization

Customers like timely offers that address their specific needs but detest receiving generic offers that they don't require. You can tailor your offerings and make this process automated and secure by using software with the appropriate analytical, data mining, and processing components.

Automation of repetitive tasks

For your staff and your business, it is mindless and inefficient labor when managers repeatedly extract the same data to create the same reports. This is because you are paying salaries for work that can be done more effectively by a single unit of software in a matter of seconds rather than hours or days by human labor.

Acquisition of new customers is cheaper and easier

Consumers need banks just as much as banks need customers. As a result, financial institutions must be open to how they draw in customers for their financial services. The good news is that you can draw these clients to you more affordably and easily.

The Internet offers excellent opportunities for communicating with these potential customers directly and on their devices. This makes it simpler to influence them, increasing the likelihood that they will approach you. The new word of mouth is known as content marketing. With both prospects and consumers, it fosters trust and raises engagement.

Enables innovation and adaptability

Banking institutions can respond to technological and business developments and expand their efforts for incremental gains. An institution can only satisfy the needs of the next generation of clients if it can modernize itself. Modern digital technology has completely changed how banking has traditionally been done.

Many new avenues for banks to connect with their consumers have been created with the introduction of shopping websites, social media platforms, and integrated mobile apps.

What influences the success of digital banking

The trend toward digital transformation, which brings financial products to consumers' doorsteps, is primarily driven by rising intelligent device usage, rising connectivity, and rising end-user experience demand.

Importance of customers

The main goal of the digital strategy is to meet the requirements and expectations of the target audience. With contemporary technologies, banks are now providing individualized product experiences, seamless query disintegration, transparency, and security, which are at the heart of client happiness. In other words, the change has necessitated adopting a "customer approach," delivering the highest level of participation.

Operating model

Customers now require a hybrid experience that combines speed and convenience with a personal connection to the product.

Modernized infrastructure

Implementing cutting-edge technologies is only part of accomplishing digital transformation. Due to the supporting infrastructure that makes data accessible to front-end operations, the digital transformation of financial services has improved today. Modernizing the outdated infrastructure has therefore been the most important aspect in advancing the banking industry's digital transformation.

The power of data

Financial and banking firms are aware of the influence that consumer data may have. More data analytics techniques need to be put in place to study and track client trends. This practice has aided the banking industry in providing more pertinent goods and services in line with consumer demands. And that’s the reason why large fintech companies use IT software firms to handle their data analytics needs.

Complete digitally-driven market

This encompasses the corporate culture, technology, approaches, and competencies that support the digital transformation in banks. As a result, one of the motivating factors for banking transformation to digital is that the whole consumer market is on the verge of becoming digital.

Technologies that advance digital banking

The banks started by creating a thorough plan to redesign their operational models, improve consumer offerings, and build an end-to-end customer-centric process when the notion of digital transformation in financial services was introduced. The banking industry must adopt digital transformation technology and digital banking trends to successfully provide value for banks and their clients.

Blockchain

Blockchain is essential to any discussion about digital banking deployment. The adoption of blockchain in the financial industry has led to safer data transfers, more precision, and improved user interfaces. Modern consumers have a strict faith in blockchain technology and think it has improved the convenience and transparency of financial transactions. Digital banking is transforming the integration of blockchain with IoT.

APIs

Improved operations, increased productivity, and immediate product and service delivery are all benefits of cloud-driven services. Banks are willing to use banking APIs to encourage data exchange and improve the user experience thanks to the integration of the cloud.

Artificial Intelligence

Online assistants and chatbots digital transformation in banking use AI to help customers by delivering the information they need to solve problems. Additionally, artificial intelligence is employed for data management and analysis, data security, and improved customer experience.

Internet of Things

Real-time data analysis made possible by the Internet of Things helps to personalize and modify the client experience. Customers may easily make contactless payments within seconds thanks to IoT and its smart device connectivity. Additionally, introducing risk management, authorization procedures (using biometric sensors), and access to several platforms through the Internet has completely changed the financial environment.

Read also: Biometric Security Systems in Mobile Banking

Solutions for the digital transformation of your bank

Businesses that use cutting-edge digital technology instantly acquire a commercial advantage. With digitization, your company has complete control over frontend and backend activities from start to finish.

Fraud detection

A bank can put together a team of data scientists due to the digital transformation process to develop a machine learning-based fraud detection system. The primary function of such a system will be to detect potential fraud. Hence it is beneficial to train the system on as many diverse data input streams as is practical. Representatives of the banking industry can considerably improve the quality of fraudulent activity detection thanks to the subsurface fraud detection system.

Cloud services

Some go to the cloud to improve security, some to free up time for their IT staff, and some to take advantage of the speed and flexibility that the move to the cloud provides. Banks are under a lot of pressure and competition nowadays, and only those banks that operate efficiently and promptly can attract new clients. Representatives of digital banking may access cloud solutions from a variety of cloud suppliers.

APIs

Another crucial element that is sometimes overlooked but aids a contemporary bank in standing out in a cutthroat digital world is the bank's capacity to integrate with various third-party applications. This requires the digital bank to have its API to be feasible (Application Programming Interfaces). The bank's software can communicate with other applications thanks to the API. As a result, banks can accept requests from clients' mobile wallets, payment switches, and other third-party financial systems (such as PayPal and others).

Chatbots

One of the primary issues with offline banking is the time it takes for bank employees to respond and for even the most straightforward queries to be answered. After all, the workday is set in stone. Every bank should consider how to develop a practical and intelligent chatbot for its online audience as we go toward the digital age.

KYC

Such software aids consumer identification and compliance with existing laws, such as the Patriot Act. The purpose of this law is to prevent money laundering and counter-terrorism by requiring banks to confirm the identity of their clients. The Know Your Customer program is required in nations like the United States, but in the digital sphere, this type of software is the most practical method of identifying customers.

Mobile apps

Businesses may benefit from mobile applications in a variety of ways. One may access their financial information, customized options, bank accessibility, and personal financial management with banking applications. However, this is not exclusive to the banking industry; every business application aids an organisation in better understanding and catering to its clients on a personal level. This is likely the reason why over 82% of companies with a digital presence use app development services to create their own standalone applications.

Data analytics

The secret to success is getting the most value out of the company data. Data analytics products and services might assist you in turning routine data into insightful business information if your company deals with vast volumes of data from several sources.

Robotic Process Automation

The main characteristic of banking operations is the extensive use of standardized procedures. Robotic Process Automation is already being used to automate many procedures. Low mistake rates and cost savings are benefits. Additionally, the burden for humans is drastically reduced, freeing up resources that may be deployed for new, strategic duties. For instance, RPA may be utilized in customer support to quickly address customers' complaints.

Binariks is your reliable companion in banking digitalization

Binariks offers safe, time-tested storage management services on Google Cloud, AWS, and Azure. With a strong feature set that includes high availability, data protection, storage efficiency, Kubernetes integration, and more, we support a wide range of use cases, including file services, databases, DevOps, and any other enterprise workload.

As businesses migrate workloads and data to the cloud, manage it effectively, and integrate it with contemporary cloud technologies, software development company as Binariks can play a critical role in the digital transformation process. We are a trustworthy technological partner. The top specialists are here to support their clients, from creating a UX strategy to integrating cutting-edge data solutions.

For assistance in specialized digital transformation for your financial company, contact us .

Final thoughts

Industry leaders may move quickly to implement technology initiatives that will help them stay competitive and relevant in the digital age if they quickly acknowledge and accept this truth. Failure to use technology might cause inefficiency, market share loss, and the inability to compete with peers.

The advantages of digital transformation for banks are numerous. However, the project has to be well-planned and carried out. Failures in digital transformation can lead to poor data quality, angry customers, and expensive system replacements. The average business is said to lose over million as a result of unsuccessful digital changes.