Digital transformation has been a complex challenge for banks, mainly due to the lack of a clear digital strategy and the fear of taking excessive risks by letting go of their heavy legacy infrastructures.
The exponential pace of implementation of new technologies for traditional banking is slower than the development dynamics of startups, which are much more agile and not subject to so many regulations, as the consulting firm Sopra Steria states in their report The Future Of Digital Banking, Revisited.
Despite these difficulties, banks are betting firmly on advanced technologies such as artificial intelligence, cloud computing and blockchain to ensure their market leadership, at the same time responding to the demands of customers who are clamoring for improvements in user experience, to boost their operational efficiency and risk management.
Challenges of digital transformation in banking
Sopra Steria‘s report prepared in conjunction with Forrester Consulting surveys 792 senior bank executives around the world to understand the strategic focus and objectives of the digital transformation they are leading in their organizations:
- Streamline their business structures.
- Strengthen and protect their customers’ data and operations.
- Improve the financial well-being of customers with knowledge support to drive engagement, create value and increase customer loyalty.
- Integrate third-party financial products and services and thus develop their ecosystem.
- Mitigate corporate governance, environmental and social risks.
- Leverage emerging technologies to protect consumers: RegTech to improve compliance, virtual and augmented reality, process automation and low-code platforms to increase efficiency.
Another of the report’s most salient conclusions refers to how “banks have made considerable progress on their digital banking transformations, new circumstances and environments hinder their path to future readiness, leaving most feeling less confident. As a result, banks will further extend their collaborative business models and rely more heavily on their vendors for assistance in coping with fast-moving market dynamics”.
Financial institutions must prioritize the creation of new sources of income, as well as encourage environmental sustainability and accompany their clients to help them achieve financial wellbeing. Banks have made progress in their digital transformations, but there are still obstacles that hinder their preparation for the future, as well as the consolidation of new business models based on the promotion of sustainability and the financial health of their customers,” explains Marc Alcón, CEO of Latinia.
The future of banking is in the cloud
For Sopra Steria, cloud technology represents a crucial element for the banking of the future, as it is changing the way financial institutions deliver value to their clients. Seventy-four percent of respondents say that this service will be the main mode of implementation in the future.
“Cloud adoption has great advantages such as scalability, cost reduction, the ability to manage big data and increase security levels thanks to its flexibility and ease of updating. The potential of this technology is indisputable. At Latinia we are committed to this technology, and we are working with our clients to provide them with more elastic models for their business,” says Marc Alcón.
Consumers demand satisfaction of their needs
One of the key recommendations of Sopra Steria’s research for banks is to focus on the need to continue to address the needs of banking customers and their business vision; “despite challenges, banks must not lose sight of the long-term plan. Visions must be bold enough to drive differentiation, otherwise the risk is that you get everything done on last year ‘s roadmap, only to realize that the world has moved on. Make room to evaluate emerging technology, and ensure the north star continues to drive long-term ambition”.
Despite the proliferation of digital communication channels, customers do not feel served by the lack of personalization from their financial institutions. The report shows that 46% of customers surveyed say they would open an account with a non-bank. And it is no secret to banks that customers have diversified their banking relationship across multiple providers, making them less likely to interact with their bank.
“Banks must intensify their digital strategy to improve communication with their consumers by implementing more advanced technologies such as those we offer at Latinia, which aim to allow banks to be truly efficient, disruptive and highly competitive in the market to respond to the real needs of customers,” concludes Marc Alcón.