In the past few years there has been rapid evolution and adoption of digital technology that is disrupting established banking business. But digitization has also thrown open significant number of opportunities for banks to deliver sophisticated customer experience, smarter decisions and operational excellence. We believe that banks need to implement a bold and comprehensive “Truly Digital” transformation strategy to succeed in 2017; and we have identified six technology trends that banks need to address in 2017 to be TrulyDigital:
Unleashing innovation with open APIs and open banking
Banking in cloud-first strategy
Blockchain: The race to production begins
AI – your sci-fi movie imagination is turning into a reality
More things to bank on
Banking Architecture – driving value with simplicity
You can read in detail about the top trends reshaping banking here.
The Infosys Finacle – Efma report on retail banking mentions that 53% of the banks feel that pervasive automation will be one of the key drivers for digital transformation in the coming year. While this makes a good case on behalf of automation, the foremost question on everyone’s mind at the moment is, how are technologies like automation along with artificial intelligence, will impact the workforce.
This new wave of automation will free up the workforce from mundane and repetitive tasks, and enable them to focus on adding innovations to the business value chain. The first wave of automation belonged to simple workflow automation, with flexible rule-based processing that spanned across multiple departments. Next was robotic automation for some applications that were part of a larger process, and this needed some amount of human support. With these automation systems in place, a lot of the tedious business processes within an organization were streamlined, and the amount of busy work for the workforce was reduced. This in turn resulted in an improvement in efficiency and performance and brought down staffing issues and expenses.
Now that the processes were streamlined and human intervention was reduced, the next wave is the era of self-learning machines. These machines learn automatically as they execute processes and modify business rules to become smarter. As these machines learn and make processes more efficient, they enable businesses to provide a more consistent experience to their customers. Cognitive machines that can learn and act are already implemented in the financial services sector to provide financial advice and security against fraud. With time, these cognitive machines will leverage the data gathered from customers to provide them with financial advice and help banks to innovate their value chain.
Automation will not be limited to just within the organization, but in this open ecosystem banks will use blockchain as an enabler for inter-organizational automation. This will be the driver for banks to act as a value aggregator for the consumers and their partners. 2017 will be the year where machines and humans will work in tandem for better business outcomes.
From a bank’s perspective, the glass is both half empty and half full as we head into a new year. The financial services industry continues to experience unprecedented change. One set of factors is purely environmental – sluggish global macroeconomic growth that shows no signs of picking up, rising regulatory capital and operating costs, depressed interest rate environments in developed markets, large non-performing assets in developing economies, and devalued currencies in several pockets, to name a few. This is putting further strain on the banking business, which is already bogged down by a marked slowdown in growth and profitability.
The second set of change drivers can be summarized in one word, namely, digitization. The rapid evolution and adoption of digital technology is posing a very real threat of disruption to the established banking business as customers continuously reset their expectations based on their experience in other businesses, and new competitors prove more agile than incumbents in fulfilling those demands. Regulators, once sworn to protect banks, are now gradually lowering the barriers by encouraging innovative and disruptive digital business models through open banking initiatives. But at the same time, digitization has also thrown open undreamt of opportunity. It has smashed the cost and efficiency benchmarks in banking operations. It has enabled unprecedented service and experience delivery. And it has enriched decision making with real-time, actionable intelligence.
Banks are therefore trapped in a delicate situation where they must transform into sustainable digital entities while battling serious environmental headwinds.Our viewpoint is that they can succeed in this parallel agenda only by implementing a bold and comprehensive “Truly Digital” transformation strategy. The time for playing at the fringes is clearly past.
We are working with several client organizations to accelerate their Truly Digital transformation journeys. This is a journey destined towards customer-first banking, towards empowering every part of the banking organization with real-time analytical insight, and towards extreme collaboration with a variety of ecosystems. Truly Digital banks are those that rest on a solid technological foundation, with their business and technology arms operating almost seamlessly. They are committed to using automation and artificial intelligence to improve operations as far as possible. And they know that the key to realizing their goals is to empower employees by building a culture of lifelong learning and innovation.
For 2017, we have identified 6 strategic and 6 technology trends linked to the Truly Digital theme that we believe will be the most influential in determining the future of banking organizations. We are delighted to share these with you through this Point of View.