4 Essentials of a Truly Digital Bank

Digitalization is not just here to stay, but the only way forward in any industry. Clearly then, banks cannot afford to be content with old-world ways of doing business that only serve to push them towards a not-so-favourable state as Digital Darwinism unfolds, especially in an industry under constant disruption from non-traditional players. Let us examine the four key essentials for banks to not only evade the predicament but emerge winners.

Partnership with technology companies

The pace of change of technologies in the digital world is so rapid, that banks no longer have the luxury of waiting it out till a technology matures to solicit help from technology specialists and introduce new technologies in business.

In the non-digital world, pain points in operations were tactically addressed from time to time with technology based reactive measures. In a digital environment this is not an option since it simply translates to a head start and lead for the competition that can claim valuable market share difficult to recapture at a later stage. Instead of waiting for a host of pain points to surface before taking the digital plunge, banks should make a big decision to partner with technology companies operating in the banking space, early on. Technology companies can periodically impart digital product education to the bank management and staff and prepare them for the change ahead.

A second step for banks could be to invest in pilot projects as part of partnering the technology companies’ evolving products. This allows both the technology company and the partner bank to share each other’s prospects. It also makes the bank privy to cutting edge digital products and services that outwit competition.

Becoming a data driven organization

In the digital age, cost, speed, ease and seamlessness of operations matter most to banks and their customers. To differentiate the products and services from competitors’ products and to keep pace with the advancement in technology, banks need to leverage analytics to gather useful insights. This could include discerning minute data patterns based on customer demography, geography, network usage, devices, products and types of apps used, customer satisfaction and many other parameters of relevance. Since analytics affords perspectives from just about any angle as long as data is made available, banks must invest in training and retraining staff at all levels to become a truly data-driven organization.

Banks need to work out an approach to arrive at a quantitative framework to monitor digitalization. A four-step process – Plan, Deploy, Measure and Improve – could be adopted to continually monitor digitalization. The Planning step involves building a roadmap for the short term, medium term and long term digital strategies for the bank. The plan must be duly base-lined after approval from the board and top management. Deployment consists of deploying a tool to measure the digitalization quotient and the tool’s parameters should be attributed to customer satisfaction elements and operational markers like cost, investment etc. Measure relates to measuring and recording the parameters on a database through both manual and automated means. The Improve step refers to learning by analysing the data from the previous step and then instituting organizational steps regularly.

Adopting automation

Digital services present unprecedented opportunities for banks to automate operations in myriad ways. The very nature of digital technologies lends themselves to automation. For example, an e-wallet that stores all the customer data on the client or server side. It is a definitive shift towards improving customer experience. Blockchain technology which is set to revolutionize digital transactions, is another case in point.

Banks should look at the entire chain of operations and identify repetitive and mundane tasks which are currently handled manually. Breaking this process down to smaller chunks and then exploring automation options with technology partners is a sound proposition. For example, processes such as opening of savings account once a customer is on-boarded, processing of files uploaded for payments transactions after relevant validation, and account closure activity for zero balance accounts can be automated.

As a result, a bank can reduce manpower costs significantly, and redeploy human capital to more worthiwhile pursuits.

Shifting investments from maintenance to innovation

Banks tend to follow a reactive model of technology adoption, waiting for a technology to mature before jumping in. In times of intense digitalization, this may not always help. The banks’ business models may need an overhaul to facilitate early stage strategic investments in emerging technologies in collaboration with technology companies. Money saved through automation can be reinvested in these strategic investments. Innovation may be crowdsourced with customers. For example, instead of making investments to enhance the features of an existing product, the bank can innovate and come up with a new product offering to suit the customer and market demands.

In general, identifying slack and inefficiencies, and pooling resources for innovation should be an ongoing process. This is closely tied to the previously mentioned strategies of becoming a data driven organization and adopting automation.


Digitalization has spawned disruptive ways and means of accessing banking services and calls for radically altering banks’ perspectives and priorities on the conduct of business. The future of the bank is digital and perhaps digital alone, and that means banks committed to technology will survive competition and outlast their competition in the distant and near future.

Digitalization also means banks increasingly need to mirror the underlying technologies in their outlook, plans and operations and hence a strategy of close cooperation with technology companies can prove highly beneficial.

Smart Banking for a Smart World

What is common to smart cities, smart cars and smart homes is that the previously “dumb” paradigms that characterized their structure, functions, and human interface have now been replaced by “smart” means and ways. The “smartness” is essentially achieved by the adoption of technologies, notably Wireless, IoT, Automation, Cloud and Analytics. An overarching term for going smart is “digital” since all the technologies that enable smartness convert everything they do into digital format in their core processing. Thus a smart city provides free and pervasive Wi-Fi to its citizens, smart utilities help reduce waste of power, water and cooking gas and smart governments help citizens avail government services more efficiently and seamlessly. Similarly, a smart home will ensure a lot of mundane work at home can be automated, or even handed over to a humanoid robot. Smart cars fall in the realm of connected cars wherein they are equipped with advanced electronics to enable variety of ways to get cars connected wirelessly to other cars, cloud, infrastructure and eventually to just about anything.

Banking in the context of ‘smartness’ needs to be evaluated for new use cases that may now be available for the consumer as a transaction in a traditional and tedious way of processing. In general, the common thread from a banking perspective is the connectivity factor, be it in a smart home, on the street or inside a moving car. Now that seamless connectivity is a given, how it can be leveraged for the digitalization of all that is enabled for banking as such, is the key question. While all digitalized banking functions will remain available in a smart environment, it remains to be seen if the bandwidth and security issues will be sufficiently addressed in the short term for smart banking. As digitalization of banking means convergence of technologies and many stakeholders at play, there is an inherent vulnerability with respect to honoring the security of the transaction.

As often is the case, technology itself provides ways to overcome the issues thrown up by introduction of disruptive technology, even if it is a bit long drawn out. Technologies like block chain can be adopted to overcome security issues and banking has to move to a more cashless ecosystem. Emerging technologies in wireless will likely reduce the cost of infrastructure and hence may make the scalability a non-issue in the future. Smart branches, smart kiosks, smart ‘staff’, smart interactive front end are going to be the face of a ‘Smart Bank’ soon. Overall, smart banking is going to be enabling ‘digital engagement’ in all aspects of Banking, which would be a combination of anywhere and anytime availability, cashless and paperless transactions, automated transaction processing and everything that enhances customer satisfaction and value.