Digital Transformation in Banking: Key Benefits and Examples

To be ready for the digital future, it’s important to understand how the financial industry landscape is changing. This will help you get in the right direction and choose your path to change. 

The digital transformation of banking involves the widespread introduction of modern ways of providing services. The number of bank branches is decreasing, and many services are being moved to online services, especially in lending or investing.

77% of Canadian customers, 71% of US customers, and 69% of Spanish use their online banking services at least every month (Forrester). 

In fact, digital transformation is the only right way forward for banks that want to be industry leaders. Let’s take a closer look at the benefits of digitalization and its key areas.

7 Major Advantages of Digitalization in Banking

To compete with digital natives, banks should provide an end-to-end digital experience to their customers by integrating necessary technologies. There are key benefits of digitalization for banks and financial institutions.

1. Increased efficiency and cost savings

Technologies allows for automation of processes and digitization of data, leading to significant cost savings and increased efficiency. This can include automating tasks such as account opening, loan processing, and fraud detection.

2. Improved customer experience

Digital transformation allows banks to offer personalized services and self-service options to customers. This includes mobile banking, online account management, and 24/7 customer support.

3. Enhanced security

The use of advanced technologies such as biometrics and encryption to improve security and protect sensitive information. This can include using fingerprints or facial recognition for account access, and implementing end-to-end encryption for online transactions.

4. Greater agility and faster time-to-market

Banks to quickly develop and launch new products and services, allowing them to stay competitive in the market.

5. Better data analytics and insights

Digital transformation in banking enables the collection and analysis of large amounts of data, providing valuable insights for informed decision-making. This can include identifying customer trends and preferences, and identifying potential areas for growth.

6. Increased competitiveness

Technologies allows banking organisation to stay competitive by using cutting-edge technologies such as artificial intelligence, machine learning, and blockchain.

7. Improved collaboration and communication

It is opportunity for better collaboration and communication within the organization, leading to more efficient and effective decision-making. This can include implementing digital tools for team collaboration and communication, such as instant messaging and video conferencing.

Examples of Digital Transformation in Banking Industry

Digital transformation in banking requires a shift to online&digital services as well as a change in backend processes to promote digitization and automation. 

Banks around the world are already realizing how investments in digital technologies could benefit customer acquisition and satisfaction. There are few main examples below.

1. Mobile banking. Many banks have implemented mobile banking apps that allow customers to manage their accounts, check balances, transfer money, and pay bills from their smartphones.

2. Online account opening. Banks are allowing customers to open accounts digitally, reducing the need for in-person visits to branches.

3. Digital payments and wallets. Financial organizations have implemented digital payment systems such as contactless payments, mobile payments and digital wallets, allowing customers to make transactions using their smartphones or other digital devices.

4. Robotic process automation. Using RPA to automate repetitive tasks such as data entry and customer service, resulting in increased efficiency and cost savings.

5. Artificial intelligence and machine learning. AI and ML would be using for tasks such as fraud detection, customer service, and personalizing offers to customers.

6. Blockchain technology. Blockchain in digitalization may be using for tasks such as clearing and settlement of transactions, and for creating digital identities for customers.

7. Virtual and augmented reality. VR and AR is wirthful tools for tasks such as remote onboarding and training of employees, and for providing immersive experiences to customers.

8. Cloud computing. Cloud computing open opportunity to store and process data, allowing them to scale their operations more easily and reduce costs.

9. Internet of Things. IoT allows to complete tasks such as tracking and monitoring of assets, and for providing location-based services to customers.

10. Cybersecurity. Banks and other financial organizations must implementing advanced security measures such as encryption, multi-factor authentication and biometric identification to protect sensitive data and guard against cyber threats.

We assist financial organizations and other businesses in getting through all stages of the digital transformation process and in mastering innovation management skills.

If you need help or support on this journey, Lvivity can be your trusted partner for such a project. Contact us to learn more about us and our capabilities.