The three pillars of digital banking
Banking like logistics, manufacturing and retail companies are on the forefront of business model and operational transformation. This is related with the fact that these vertical industries are very coupled. Manufacturing companies produce goods that are shipped to retailers and consumed by customers. During all these handoffs, money flows on every touch point, the more difficult we make money transactions, the more ineffective the supply chain becomes and that comes with a price. Retailers, logistics and manufacturing companies are in constant optimization mode, bringing the rights products, the right quantity, in the right moment at a minimal transport cost. All these principles, are driven by managing lows, physical, information and financial. Manufacturing companies are working together with logistics companies in order to decrease the time it takes to plan to deliver, optimize deliveries, predict unpredictable events on real time, like strikes or methodological alerts and traffic conditions, detect fraud by the use of Internet of Things operational design and integrate supply chain operations like transport documents and invoices. Banks that assure financial transactions need to adapt as well, like manufacturing and logistics companies reinvented themselves driving the continued need for simplification, automation and innovation.
Empowering banks to be part of this integrated supply chain
Transformation means driving change in these three pillars:
Digital experience first by design
Make things easier and simple for the customer. It is not anymore about creating mobile apps to check balance or make transfers it is leveraging big data to recommend investment opportunities when there is a surplus in the account or to prevent default, when there are signs that the customer will not pay the loan because there are some overspending patterns that arise from all channel transaction history.
Digital workplace first by design
With the looming of self-organizing teams and mobile first customers, work and collaborate as a team from anywhere and on any device, to support banking operations and enterprise transformation projects.
Digital business model first by design
Make things different and generate new areas of primary income source, like pear to peer mobile lending. Accelerate competitive advantage by the Internet of Things, for example providing information to consumers where there is the nearest on-line ATM, implementing predictive maintenance on ATM and automated equipment which customers interact with.
Digital experience first by design
The rise, evolution, collision and merge of cloud computing, social media, mobile, analytics and things, as well as, communication technologies becoming ubiquitous, the fact that penetration of smartphones is growing even the emerging countries, as also as, the fact that users want to have the same interaction experience with companies, the same way they are used to in their personal life, changed the way operations are designed and performed.
The fact that humans have today access to more information that the companies, as also have to tools to make decisions and execute actions shifted the power of operation control to the society. In this new environment, customers are more technologically demanding than ever before. This also extended to workers and partners that for the reasons exposed above want to replicate their personal interaction experience in their working environment.
Consider the following scenario before the convergence of cloud, social, mobile, analytics and things. When a company wanted to get a contract award, the customer had only access to information that was provided by the companies that where competing for the request on quotation. This limited their choices and bargaining power. Today, customers are using full force ahead digital technologies to take power from institutions.
Customers can easily discover pricing, reviews, features, offer components, service level agreements and make a decision anytime anywhere in a way that when companies discover that the customer made choice to a competitor, it is too late to steal the deal. The customer already wired the money to a new financial institution.
The customer experience may be the most impactful area of innovation available to businesses today. With the rapid rise of personal digital technology, customers have become savvier and more demanding about how they want to interact through technology.
Image this scenario when you in the role of a customer are looking into your account balance and time and time again you notice that you have a surplus in your currents account and you don’t know how to do it. By default, the attitude of your banker is it will call you when your account is on negative, you have outstanding payments you cannot honor.
Sometimes the banker does not have a positive and proactive attitude to take care of your effort on create that money surplus that you can leverage on top of it even if it is for a short investment time period. Now image that instead of looking to your account profile page without an idea of what to do, you could get automatic recommendations about how to apply your money or get personal recommendations on investment options from your banker after he received a filed alert that cash is growing ahead of short-term needs or a previous investment is just about to reach maturity. This is just the beginning of virtual finance assistants.
What I learned from multiple conversations with banking institutions
The focus is on new digital business models. Re-imagining banking and create new value with highly-automated processes that beyond meeting the security, privacy and transparency expectations of clients, regulators and shareholders have embedded automated intelligence or collective intelligence – like for example risk community based assessment. Banks are starting to look to humans from the human lifecycle perspective, from our spending or investment habits our risk profile, combining these new perspectives in completely different business models.