Digital Transformation in the financial sector: are you keeping up?

    Digital Transformation has been the talk of the year, with business having to shift into a new reality. Is the financial system adapting fast enough?

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    Much has been said and written about digital transformation. Everything is being automated, robots steal our jobs, startups threaten the traditional business models… But what is the truth in all this? Are fintechs really a threat to the established values in the financial sector? Are banks “dinosaurs” lagging behind? Or is our perception off?

    Fintechsexample or competitor? 

    A consequence of digitization is that more players can offer the same service, and sometimes at a lower cost. However, most companies don’t view startups in the financial sector as a threat. Quite the contrary, fintechs are usually welcomed because they challenge the other players in the sector, who look forward to their actions and their technology. The only issue is: there are so many initiatives and standards that you have to gamble on who you want to collaborate with, and at what moment you join. 

    Fintechs typically only optimize a small part of the bank-customer relationship chain. They don’t have their own customers, as the bank continues to own the relationship with the customer. The visibility that the bank may lose due to the use of apps can be made up for by pooling all the data they now have access to, and using these data to produce valuable customer insights. All too often, the data is still divided in separate containers. 

     

    What bottlenecks that hindering a rapid digital transformation? 

    On the one hand, you have the shareholders. The shareholders of a bank will have different expectations than those of a startup and might not be so digitally-savvy especially considering that all the trendy Uber-like startup companies still show red figures. 

    Transformation is also held back by data legislation and regulators. The trend in regulation does not tend towards simplification - banks have to hire specialized consultants to determine what is allowed and what isn’t. With GDPR in place and privacy laws rapidly evolving, the sector seems to be always facing an unrealistic race against the clock. 

    Let’s look at the example of mobile banking apps in Belgium: the small screen of a smartphone forces banks to stick to the essence. But each screen must be checked and approved by the Financial Services and Markets Authority in Belgium (FSMA). And by simplifying, sometimes the result has the opposite effect of what is desired: it's all become so simple that the customer is wondering whether it's still safe to use the app. 

     

    Challenges for tomorrow 

    Technology is like gravity: it’s there and you can’t avoid it. The financial crisis and the changing loyalty of customers might suggest the worst, but we are already seeing customer banking experiences being improved by 85% thanks to digitization. And this trend only seems to be growing, as the abrupt change in the market’s landscape, accelerated most companies digital transformation journey.  

    A change in mindset is required, and it’s a challenge to radiate this mindset to every facet of the enterprise: from the phone that is picked up to the screen that is shown to the customer. The biggest challenge, though, is still to digitally translate some agencies’ motivation and their commitment to their customers. 

    Published on    Last updated on 26/10/2020

    #Customer Experience, #Digital Transformation

    About the author

    Inês Pimentel is Senior Content Marketing Manager at Amplexor, based in Lisbon. With broad experience in marketing and communication in tech, service and non-profit contexts, Inês joined Amplexor marketing team in 2016. She's certified in Inbound, Email and Content Marketing.

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