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Banks: Racing towards Digitization






Hey Banks, FinTech is knocking

Understanding digital banking activity can help traditional financial institutions determine where to invest in capabilities that engage and satisfy consumers.

FinTech – or financial technology – is one of the hottest areas of technology right now, with money pouring into the sector and startups propping up all over. Investors and founders are expecting the technology to help them remodel everything from lending and payments to bond trading. This will let them do things faster, better, and more economically than big banks have traditionally.

FinTech, which is witnessing more than a billion dollar per week flowing into startups globally offer new or traditional financial products, such as payments and loans, but services are delivered via sophisticated, disruptive softwares. With the funding and focus of this stature, there is a growing fear that they could start to eat away the traditional financial institutions’ lunches. Insurance sector is also witnessing a big time makeover. Disruption in insurance[1] space highlights the huge window of opportunity that is opening up in the insurance sector, as it moves through this transformative phase.

But do traditional banks, and their investors, really have anything to worry about?

The reason why traditional massive banking institutions are not worried about FinTech is because of their strategies wherein they are joining their own threats. Not all are on the same page but the ones which are doing so, are showing positive signs of growth and evolution. Alliance with FinTech startups is seen as a crucial element in bank’s digital transformation strategies. According to a survey[2] of financial executives conducted by IDC, one in three banks are open to a collaboration with a FinTech company while one in four is considering an acquisition in near term.







Based on our work with leading companies as well as proprietary research, we have identified five touch points wherein banks are concentrating the most and collaborating with FinTechs, to enrich the overall customer experiences. These areas are best suited for generating the kinds of insights that lead to new growth opportunities.

Providing Seamless Customer Experience across Channels

In today’s “connected world”, being able to provide a pronounced customer experience is getting more intricate than ever. Historical studies have shown banks have had a whirlwind ride when it comes to customer experience. World retail banking study conducted by Capgemini and Efma shows that CEX has varied quite a bit over several years. Their Customer Experience Index witnessed a marginal drop of (0.8) percentage points from 73.5 in 2013 to 72.7 in 2015 whereas banks improved their position on Capgemini’s Customer Experience Index by 2.9 points thereafter. Providing a consistent multichannel experience has been a challenge for banks and they are now leveraging predictive analytics and data mining to provide “single window” for resolution thereby greatly impacting the customer experiences.

In order to build long-term client relationships, the element of customer loyalty is essential, which, to much extent, depends on customer experiences and some banks like DeniZbank are already on it.

Today, DenizBank noticeably understands their customers and they are showing their customers that they really care. As the 5th largest private sector bank in Turkey, with presence in all business lines, DenizBank helps customers in corporate, commercial, SME and consumer segments offering fully integrated financial services. DenizBank’s Contact Centre is one of the major customer communication points for the bank. Customer service is the focal point of the bank and they are one of the biggest call centres in Turkey, with 500 employees serving 500,000 unique customers per month.

Innovative Products & Services

Product Innovation

Mr. Stephen A. Asare, Acting Deputy Managing Director in charge of Finance, Administration and Credit Administration at Prudential Bank said the bank was poised to introducing more products to meet the needs of customers. He said technology has transformed the way banking was done adding that the bank has rolled out a number of electronic banking products to make transactions easier for customers.

Changing customer demographics & expectations are driving the need for innovation to meet customer demands. Today, the banking industry is moving more quickly towards an open innovation ecosystem with different players collaborating to develop new products and services. This is how Fidor bank is doing it.








As of February 2015, Fidor Bank has achieved more than 75,000 fully legitimate banking customers, up from 25,000 three years prior and approximately 270,000 German users on its Fidor online community up from 160,000 at the beginning of 2013. It is extraordinary growth for a digital bank that focuses on social banking with no branch network or internal advisers.

Innovation in Payments







Innovating Channels & Touchpoints

Customarily, retail banks have used branches, ATM, call centers, mobile, and Internet to communicate with their clients, though newer direct channels such as social media have emerged lately. Branches had played an imperative role in the past but are now losing charm & relevance. However the changing needs and inclinations of clients, combined with advancements, has augmented the popularity and adoption of direct channels over the last decade.

The Bank of East Asia, Hong Kong has used technology to create a brand experience strategy that promises to deliver the best digital, omni-channel retail banking experience in the region.








The digital branches have yielded a 35% rise in deposit balance per customer, and a 65% increase in average mortgage drawdown compared to other branches.


Providing Smart Advisory

Artificial intelligence, which comprehends nowadays a wide range of algorithm enabling’ technology, is inching into our lives. Asset management and wealth management is no exception. By 2020, advisory firm KPMG believes wealth management robo-advisory services will touch USD2.2 trillion from about a half a trillion at present.

Robo-advise streamlines the account opening procedure, and its capacity to transfer assets is expanding. All things considered, it represents a worthwhile basket of services at a striking price.

Vanguard’s Personal Advisor Services










Vanguard benefits from consumers’ confidence in the firm as a low-fee industry leader. Vanguard Personal Advisor Services saw net inflows of $7 billion as of March 2015, and it already had $10 billion from the firm’s legacy financial planning services. In sum, Vanguard’s entrance into the rapidly expanding robo-advisory world is an example of how consumers benefit as competition in the financial advisor landscape intensifies.


Success in the digital era relies on upon a bank’s ability to react logically to the threats and opportunities of FinTech development. Executives must ask themselves why, what and how they are inventing & transforming, and have great confidence that each answer is backed by a healthy growth plan and safeguarded by a digital risk platform. Banks should start building a digital ecosystem risk management structure. Because FinTech is intrinsically digital, the banking sector’s wide scale investment in this area requires an augmented emphasis on cyber security. By constructing their digital assets on the top of a holistic digital risk platform, banks will help guard their brand, intellectual property, customer data and help to ensure availability and a durable customer experience.

It’s become a cliché that digital banking customers are your best customers, but Bank of the West and Fiserv have data to support that hypothesis.








The new, more youthful era of customers are innovatively astute and profoundly adjusted to the online world. Despite the risk postured by the new generation of start-ups to the prevailing industry, there is also a strong opportunity of amalgamation & integration. The good news for banks eyeing to move to digital is that there’s plenty of help and support to enable them to do so. FinTech is at the top of many governments’ agendas, and establishments like Innovative Finance in the UK and the Open Transaction Alliance in Europe have been started precisely to foster alliance, expedite dialogue and boost innovation within the financial services sector.

Every generation has certain technological innovations as well as critics who say they will never catch on. History teaches us that when you hear an unbelievable statement about what technology can do, evaluate the concept suspiciously, but keep an open mind. Today, when someone says that FinTech is just not going to remain forever and banks may continue doing it the way they had been, should rethink!!

In 1903, the President of the Michigan Savings Bank said “The horse is here to stay, but the automobile is only a novelty – a fad,”

And rest is history…

[1] Disruptions in Insurance: State of the Sector-


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