All You Need to Know About Digital Transformation in the Banking and Financial Sector

2020 taught us a lot. Not only how to cope with moments of isolation, different work patterns or adaptations in the ways we entertain ourselves, but it’s also brought to light a number of conveniences that for the 21st century, should be held as the norm regardless of a pandemic stopping our ‘normal’ lifestyles to a dead halt. 

Some of these commodities are related to the ways in which we carry out everyday practices resulting in online shopping, virtual education, remote working and digital banking. In this blog, we will take a closer look at the digital transformations that were noticed in the banking and financial sector with the rise of social distancing, the inability or reluctance to leave the house and the realisation of available simplicity in an overly complicated world. 

How did a pandemic alter the way we think about banking and the financial sector?

COVID-19 was an eye-opener to innovators, entrepreneurs and those well versed in technology and its applications. It also made such open-minded thinkers understand that consumer demand and satisfaction is above all else if a good service is expected. Let’s take a look at the world of banking and finance more closely. 

In recent years, in-branch banking was slowly being aided by technological advances. The now traditional ATM is not even considered a convenient solution by many, given that options such as internet banking, mobile banking and smarter FinTech solutions such as Venmo are readily available to the public. 

Each of these solutions draws consumers away form the queues and paperwork of traditional transitions done over a teller’s counter, and with the Corona virus outbreak, where banks were brought to a standstill, consumers had to make do, adjust or relish in the advances of modern technology – a perk that the financial sector was aiming for, despite the circumstances and effects of the pandemic. In 2020 alone, investment apps soared with an 88% growth rate, while payment apps increased by 49% globally. 

Powered by artificial intelligence, blockchain, big data and cloud based technology, the modern ways of banking simply took a giant leap in the right direction, giving users flexibility and access to safer, more convenient options. 

Did the Pandemic cause this shift? Or was it an Expected Step in the Banking and Financial Sector?

Much like any of the improvements our 21st century lifestyle has noted due to advanced technology, this digital transformation was not only expected, but encouraged by users across the globe. Although it might seem so, the advancements that take place are not always caused due to consumer demand, but also expectations of the digital age

But there are still further improvements that can be made in the sector. Here are a few concepts that might improve the banking and financial sector, both locally and globally.

The introduction of video banking

While in-person banking, for the foreseeable future will probably still exist as an available service, with the introduction of video banking, it might not be the only face-to-face solution. During the pandemic, once branches were allowed to reopen, banks noticed a decline in customer interactions. Their greater portion of their consumer market was the identical age bracket of those who were warned to stay home and stay safe.

With safety in mind, these bank users were nudged in the direction of innovation, taking to digital transformations more swiftly. Video banking is probably one of the easiest transitions that still allows for some sort of human contact, albeit virtual. With small steps such as this, bank users were encouraged to adapt and have their needs met by digital banking and other virtual financial services. 

Creating more streamlined services

A streamlined banking or general financial service would allow users to effectively carry out their spending, saving, borrowing, investing and third party payment needs through one simple and easy to use place. And if we’re thinking of digital transformations that relate closely to the expectations in our busy everyday life, it would probably be in the form of an app powered by Apple Pay or Google Pay for example.

While many financial apps tend to need a connection to the user’s primary bank account, the features and facilities within apps such as Revolut. Revolut has changed the way we bank and spend, with statistics to indicate our budgeting, tools to help us save and set money aside for whatever it may be, this app allows us to communicate B2B and B2C plus also C2C. There are no limits on how to manage your money – even in different currencies; with waived conversion fees as a major benefit. 

These factors, plus improvements on these advancements, will result in additional benefits to the banking and financial services industry, including:

  • Swifter transaction rates for faster payment and remuneration
  • Secure transfers to third parties with no fear of fraudulent attacks
  • Lower conversion rates or none at all across all borders
  • The ability to buy cryptocurrencies through your bank
  • The request and approval of loans through in-app applications
  • Smoother in-house communication and processing
  • Increased efficiency and reduced waiting times for consumers
  • Additional time and resources to help improve the industry’s offering

Understanding what the consumer market needs can be a tough task; mostly because we all manage our baking and financial aspects in a different way; and at times are not so open to speaking about our budgeting or investing methods. 

With digital transformations in the banking and financial sector taking priority in the majority of the world, innovators are encouraged to keep the ideas flying in, encouraging more and more use. But what does this mean for traditional banking, will it be a thing of the past in years to come? Perhaps, but with change comes new possibilities and with this adaptations will have to follow. 

Want to learn more about digital transformations and how they can improve your business? Get in touch with the digital revolutionaries at 4Sight, we’re here to help you innovate, create and adapt.