Embracing digital technologies provides huge potential to banks by improving efficiency, optimizing processes, and enhancing customer experience through innovation. Despite several benefits of digitization, the banking industry was traditionally refraining from adopting this fruitful change. According to PwC, in their ‘Financial Services Technology 2020 and Beyond’ report, the consulting leader found that 81% of banking CEOs are concerned about the speed of technological change—more than in any other industry sector.
Resistance to Change – Why?
If digital is the present and it is going to the future, why are banks, especially the retail banking sector, not open to change? Security and data privacy risks, followed by the high cost and complexity of technology migration and a skills shortage are considered to be the reasons for this resistance.
In order to adapt to the changing landscape, banks need to focus on their IT departments. The digital reforms in banking should start with having a comprehensive Saudi digital transformation strategy in place. To do so, banks should focus on three major areas:
- Rebuilding Customer Experience
- Creating a Robust Partner Ecosystem
- Investing in Digital Technologies
Digital Transformation: Five Emerging Technologies That Banks Need to Invest In
Enabling technologies in the banking sector is perhaps the trickiest part of embracing digital transformation. While the IT spending of banks is expected to grow by 4.2% globally each year and reach over $290 billion in 2021 (Celent), these organizations are still behind in terms of innovation.
Banking sector needs to replace their bolting legacy systems with the new age digital platforms. Whether or not these banks have adopted or adopting the digital model, they all recognize the technologies they will have to invest in the next few years to stay relevant.
Below are top five digital technologies that the retail banking sector should invest in:
- Artificial Intelligence
- Machine Learning
- Cloud Solutions
- Data Analytics
How Can Data Help Retail Banking Sector Drive Value?
Banks have a major advantage: customer data. This data is huge (Big Data). Banks need to to combine these data in one place and club it with the social media data, including video and potentially IoT data from smartphones and wearables, to develop a 360-degree view of their customers.
Using this data, banks can provide digitized (and customized) solution that deliver right offer at the right time, and predict fraud thereby reducing risks and boost cross-sell rates. Remember:
- Data drives performance
- Data drives business growth
- Data drives innovation
- Data drives profitability
But for delivering those insights and recommendations to customers, banks need to go beyond just business intelligence capabilities. They need to hire people with the right skills using the right data and tools to find the patterns that will drive customer product usage and profitability, while reducing fraud and credit losses.
The Bottom Line
Digital transformation in retail banking is not easy. The sooner the banks develop a strategy to onboard new technologies, the quicker they will reap the benefits of digitization. Banks need to identify the gaps and areas of improvement and work on it to achieve digital maturity.