Digitization in the financial industry: The bank of the future
The digitization of internal and customer-related processes is associated with great prospects for success for banks and credit institutions. Not only does it open up new business models and revenue streams for the companies themselves, but customers also benefit from increased convenience and customized solutions. In this article, we show why digitization is fundamental in the financial industry today and what requirements banks will have to meet in the future.
The financial industry in transition: New ideas instead of outdated business models
For a long time, net interest income was the most important source of income for banks. After years at a very low level, a potential recovery is just beginning. Income from commissions is also stagnating. But customers have also become more demanding, wanting individualized and convenient solutions. More and more people – especially younger generations of customers – are coming to branches less and less frequently, which brings with it incentives to save on personnel and material costs. In order to survive in the long term, banks are therefore required to develop new business models and offerings. Digitization plays an essential role in the financial sector.
Just like Amazon, Zalando, and others, banks are information-processing companies that can use the data available to them and will have to do so actively in the future. The key here is to conduct smart analyses, draw the right conclusions, and take action based on the insights gained and personalize offers as much as possible. Corporate customer data provides banks with insights into supply chains and production processes, among other things. In this way, potential risks can be better assessed or tailored financing can be made possible.
Professional IT systems: the basis for digitizing the banking business
IT solutions, such as our BANCOS solutions Core Banking, Onboarding, and Online Banking, among others, play an important role in the digitalization of the financial industry because they provide banks with the necessary digital infrastructure and smart solutions. Openly designed systems that offer diverse interfaces without sacrificing security are in demand. In order to remain competitive, the focus for banks is on dovetailing business processes traditionally divided into individual segments – including branch business, payment transactions, private and business customers. Important aspects of digitization in the financial sector are IT security, clouds and big data (also in combination with artificial intelligence). The associated processes can be automated via core banking systems as essential digital instruments in the background. Despite the holistic approach, modularity and thus flexibility are important premises for the IT solutions of banks and fintechs.
Communication with customers via mobile devices such as smartphones and tablets is a fundamental success factor. The goal is to provide consistent and convenient support via various channels – such as e-mail, social media, website, and call center. Unlike in the past, existing and potential customers no longer necessarily go to the bank branch to obtain a financing offer, for example, but obtain information online – at any time and from any location. As part of the so-called “customer journey,” communication becomes a digital experience for the customer. Branding, storytelling, and user experience (UX) are buzzwords that are on everyone’s lips for a reason. Only with digital solutions like the fast and uncomplicated BANCOS Onboarding, are credit institutions up to date and able to meet the demands of their customers.
The customer as a central factor in business activities
For banks, this opens up the potential to offer their services via platforms and digital ecosystems – a combination of software, infrastructure, and platform. Unlike platforms, which merely bring together customers and providers in a two-sided market and receive a commission in return (for example, booking.com or Airbnb), digital ecosystems bring together an expanded number of players, such as customers, providers, platform operators, and service providers. Smart apps and software solutions such as those from BANCOS are able to meet the needs of customers precisely and, at the same time, guarantee the greatest possible security. In order for banks to survive in the future, they will be required to work in a customer-centric manner, to offer processes digitally or at least with digital support and – just like direct banks, brokers and tech groups such as Amazon, Apple, and Google – to operate close to the customer with open, flexible systems.
We would be happy to present our professional software solutions for the digitalization of the financial industry to you in detail in a personal meeting. A major advantage: Thanks to modular architecture, the solutions can be optimally adapted to your individual requirements and integrated into existing system landscapes. Contact us and we will help you with our expertise!