At present, the financial sector is undergoing a pivotal moment where data has emerged as the core of all interactions. As financial institutions strive to shift from being mere intermediaries to becoming advocates, they must adjust their strategies in line with the changing digital landscape and incorporate new technologies. It is crucial to prioritize the key areas of focus, as juggling too many initiatives simultaneously can tie up resources and hinder innovation.
While banks are still slow in adopting technology, FinTechs are using innovative technology to deconstruct traditional banking services into point solutions that can be rapidly deployed and adopted.
Your competitiveness in the market hinges on your ability to concentrate and invest in the critical priorities that can have the most significant impact in the areas that count the most.
Why do Banks and Financial Service Providers Need to Undergo Digital Transformation?
Financial service providers are undergoing digital transformation due to the increasing demand for personalized services, intuitive interfaces, and robust security within financial services. This demand has led to an urgency to adopt data and insight-driven approaches. The financial sector, including banks, insurers, and payment processors, is exploring various technologies, such as cloud services and automation to enhance security and artificial intelligence for personalized services, to achieve a successful digital transformation.
This trend is responsible for reducing the risks inherent in digital transactions while increasing revenue and efficiency gains. Statistics suggest that technology and digital transformation improved operational efficiency by 40%, had faster time to market (36%) and the ability to meet customer expectations increased by 35%.
The Focus Should be on Leveraging Technology and Digital Power to Drive Growth
Today's customers, predominantly millennials and Gen Z, are driving banks to transform their operations. FinTechs are disrupting the traditional banking industry by leveraging technology to offer innovative financial solutions. By using modern technology and data analytics, fintechs can provide personalized financial services to customers at a lower cost than traditional banks.
Additionally, fintechs often offer a more seamless and user-friendly experience, as their platforms are designed with modern user interfaces and functionality. These factors have made fintechs popular among younger consumers and those who prefer the convenience of online banking. While traditional banks still dominate the financial industry, fintechs are gaining traction and have become a significant disruptor in the market.
Technology is playing a significant role in all aspects of the industry, from retail banking to mobile apps, fintech, and neobank startups. Banking leaders are investing more in future-fit tech strategies and accelerating digital transformation, as evidenced by the increased investment in this area. According to Insider Intelligence forecasts, the banking sector’s overall IT and technology spending in the US is expected to rise from $79.49 billion in 2021 to $113.71 billion in 2025.
Technology can help banking in numerous ways:
- Enhanced Customer Experience: Technology enables financial institutions to provide more personalized and intuitive customer experiences through digital platforms, mobile apps, and other innovative channels.
- Improved Efficiency: Technology can streamline banking processes, automate manual tasks, and reduce operational costs.
- Increased Security: Technology offers robust security features that protect customer data, prevent fraud, and safeguard against cyber threats.
- Data Analysis: Technology provides advanced analytics tools that enable banks to extract insights from large volumes of data, such as customer behavior, market trends, and risk management.
- Innovation: Technology drives innovation, enabling the development of new financial products and services, such as blockchain-based solutions, mobile payment systems, and robo-advisory platforms.
Overall, technology is crucial in driving growth, improving efficiency, enhancing customer experience, and enabling innovation in the banking and financial sector while keeping customer satisfaction at the core.
Key Priorities that Leaders must Focus on to Drive Transformation and Innovation in the Banking and Financial Industry:
Embrace digitalization: Adopting a digital-first approach and driving end-to-end digitalization is essential for banks to stay competitive and offer customer-centric products and services. This involves leveraging advanced technologies like AI, cloud, and automation to drive innovation, improve workflows, and foster an ecosystem of reliable partners. Exela can help prioritize digitalization and assist banks to build a more harmonious and secure internal and external ecosystem.
Streamline processes and products: In today's post-pandemic environment, optimizing day-to-day operations and workflows is critical to delivering a seamless customer experience. Banks must modernize legacy systems, migrate them to the cloud, and use technologies like AI and robotic process automation to streamline back-to-front office operations.
Deploy regtech solutions: Regtech solutions are essential for ensuring regulatory compliance and minimizing the risk of compliance failures. By prioritizing regtech, banks can ensure more robust reporting, minimize human error, and enhance the customer experience in areas like KYC.
Embrace open banking: An open API ecosystem enables banks to assemble best-in-class financial services that cater to the unique needs of their customers. Moreover, banks must design processes and systems while keeping API at the core to compete with FinTech, which use the same approach. Exela offers Treasury as a Service (TaaS), enabling banks to deliver future-ready invoicing experience to improve customer satisfaction.
Ensure robust cybersecurity: As digital technologies become more prevalent, cybersecurity is an ever-present concern. Banks must use the latest tech tools for cyber defense and IT delivery to ensure secure banking experiences for their customers. A strong governance framework, regulatory risk assessment, and control testing and remediation monitoring are critical components of a stable and safe IT landscape.
Here’s how Exela can help
Our expertise in digital transformation, automation, and innovative technologies has been instrumental in helping banking and financial industry customers tackle operational challenges and meet customer expectations.
The key imperative for banks is the need to design processes and systems from first-principles in order to compete with fintechs that are using similar approaches to deconstruct traditional banking services into point solutions that can be rapidly deployed and adopted. The question, therefore, is not whether a bank should add remittance features to a DACA account, but rather ask, what is needed for the remittance function or workflow, and how the bank can best service that requirement. This often leads to a process-first, API-first way of thinking, and the adoption of a fairly transparent "open banking" approach where the necessary account structure (not always a DACA) and risk framework are chosen so that the clients' time-to-market and speed-to-onboard metrics are met.
For example, online lending or account origination cannot co-exist in a workflow that needs 3-4 weeks and requires a manual DACA account to operate.
We have assisted banks in transforming their operations, expanding commercial client relationships with comprehensive invoicing automation, cash management, treasury services and more.
Get in touch to know how our banking and financial industry clients have leveraged Exela’s expertise and advanced technology for their operations.
