Digital technology is transforming banking. Banks are spending billions digitising their business in an effort to hang on to increasingly demanding and digital-savvy customers.
The digitisation comes at a tricky time for many banks. They’re facing increasing competition from technology services offering payment and other banking services. Tougher banking regulations such as Basel III are requiring banks to set aside more capital against losses. How can banks get value for money from their digital projects?
Here are five tips based on recent BearingPoint Institute research* which analysed 48 European banks’ digital technology attempts to digitise their business (the technology, their strategy and what they are doing well and badly).
- Digitalisation should be considered across all business areas of banks and links in their value chain. It’s not just for customer service. Back-office tasks can also benefit: by being automated and cheaper.
- Digitalisation should be seen as an opportunity to boost growth and improve service rather than only as a way of cost saving.
- Banks should collaborate with new market entrants to encourage digitalisation and to stay competitive. Both parties have much to gain: banks get access to clever technology; ‘fintechs’ get the kudos of working with an established bank and maybe a partial or full banking licence.
- Encourage all parts of your business to be innovative in how they use digital technology. But don’t devolve power so much that your digital strategy is disjointed or unclear. Make someone responsible for your bank’s digital technology – perhaps a digital officer with their own budget, or make your chief technology officer responsible.
- Check your IT security. Advanced technology can become a liability if it leaks customer data or is hacked. Review your security software and security policies. Fraud-detection and analytics technology can help prevent intruders from breaching your network and highlight suspicious transactions at an early stage. The ubiquity of digital technology in banking makes security a much bigger issue.
*BearingPoint Institute, ‘7 digital questions for banks’, survey, 2015