Last updated on August 3rd, 2023 at 09:06 am
Today’s financial services industry is nothing like what it was a decade ago. Changing customer behavior boosts in technology and intelligence and the general digitization of society is what’s behind this massive change. Over the past few years, banks have had to pull their socks up and get with the times to stay afloat. For many, this meant a digital transformation.
What is a digital transformation?
Digital transformation is the integration of new-age technology into all aspects of a business. It branches off into two– the fundamental changes in operations and client services, and the cultural transformation that follows in its wake.
Digital transformation in retail banking is driven by the need to speed up growth. In fact, 87% of banks have a long-term plan for digital innovation in place already. It’s just as well, seeing as online banking systems and third-party companies such as Paypal and Google Pay continue to threaten traditional banking organizations.
Investments in data analytics and the cloud are on a steady plateau, but expenditure on next-gen technologies like blockchain and Artificial Intelligence is on the rise.
Where are these technologies used in retail banking?
Customer service: Customers are increasingly choosing their primary financial service providers based on how easily they can operate and access their assets and how mobile the system is.
Digital IDs: Biometrics-based solutions enable customers to register once and be recognized each time. This increases operational efficiency and tightens security.
Voice banking: Voice authentication and banking are largely untapped, but it’s only a matter of time before AI-powered digital assistants catch on just in the retail banking sphere just as digital transformation, in general, did.
Distributed ledger technology: Traditional retail banks maintain central databases but they’re slowly making the shift to blockchain systems, where there’s no need for intermediaries or central authority.
What is the role of data in retail banking’s digital transformation?
Retail banks are inherently data-driven businesses. How well they use customer data insights is what gives one bank a competitive edge over another. Small wonder, then, that the role of data in extremely crucial in the digital transformation of retail banking.
Here is a quick breakdown of how data can be used in new-age banking:
Hyper-personalization: Too often, traditional banks have tried to target individuals based on crude segmentation that does more harm than good. With new-age technology, data analytics on consumer information can identify how to effectively target audience in an age where banking is no longer a life-long commitment.
Insight-driven services: Retail banking needs data to establish and promote insight-driven services that add value. A lot more is asked of a retail bank today than 10 years ago, and not just in terms of interest rates and lockers for valuables. Banks must come across as having customers’ best interests in mind to establish brand loyalty and drive numbers.
Personal Finance Management: with data and technology, banks can better cater to customers and assist them in managing their money efficiently. Personal and relationship managers have long been a part of the retail banking system. But with the help of data analytics and technology, banks can deliver into insights that once eluded them, thereby making the system more efficient and personalized.
The retail banking sector is in for a rough few years, but the silver lining is that banks already have a headstart on client relationships. Using digital banking to leverage these personal connections can make retail banks far more indispensable than their online competitors.
What does this mean for employees and aspirants?
Traditional methods and syllabi can only go so far in preparing you for digital disruption. New-age banking courses can effectively prepare people of all experience levels for the digital age. The better banking courses are those that will give you hands-on experiences and allow you to interact with industry professionals to see how the digitization has transformed their daily work.
Retail banking training can also be organized by the banks themselves. Introduction to these technologies is crucial to maintain stability during cultural and structural changes. To learn new-age banking is to prepare oneself for the future.
