Digital transformation is like taxes or iPhones: present everywhere. Despite many CEOs, CTOs and CIOs being interested, not all of them have a clear picture. In reality, it’s not only about technology. It’s a tool that enables teams to work efficiently, creating even more valuable products. But first – security.

Digital transformation in the financial industry – security first

Digital products have to be secure, especially FinTech ones. After all, people trust third parties with their vital private data, not to mention money. At the same time, the threat landscape is constantly evolving, forcing business owners, developers and cybersecurity consultants to transform applications. The ability to withstand an attack is imperative – a “security problem” can and most probably will become a “business problem”.

Last years were full of dangerous events and discoveries, with the infamous Genesis in the first place. This big underground market offers digital fingerprints of online banking users from around the globe. The site claims to have bots bypassing fingerprint controls across multiple devices and systems, which definitely sounds like something to worry about. Other reasons are attacks like Equifax, NotPetya or WannaCry. From these examples, it’s clear that advanced technology and internal procedures related to identity confirmation and payment functionalities should be prioritized.

The banking industry digital transformation is driven with security and compliance in mind but that’s only the first aspect. What else is on the horizon?

What comes next for digital transformation in banking?

Financial transactions will eventually become contactless, requiring sophisticated security measures. The wide adoption of blockchain will penetrate the sector even more.

The role of financial applications therefore changes. Interactions between humans and devices, driven by habits and workplace/private place environments, define app development. The ability to serve payment needs on-the-go, largely satisfied, is consistently replaced by the integration of payments into a larger number of services, products, and physical terminals, capable of cooperating with new tech. It’s no longer about mobile payments, now it’s about membership privileges, product information, and bonuses for app users.

Readiness is everything

Balance between the need for data and growing concerns about privacy loss has to be addressed. According to Accenture’s report, one-third of financial services companies don’t have a roadmap or resources to face privacy risks related to customer data in the upcoming 12 months. Issues like privacy risk monitoring, maintenance of processed records, and customer data exchange between companies are already hot topics, progressing from “nice-to-haves” to “must-haves”.

Growing costs of market research and customer onboarding compresses profit margins but wins loyal customers in the long run. Strategic initiatives like the European Digital Single Market (DSM) opened a space with around 500 million potential customers. Getting to know them and convincing them to use your app takes time and money but it’s worth it.

Regulations on top of regulations. The trend is strong and it’s not likely to slow down. According to Eurostat and other European agencies, more than half of the EU citizens have shifted to digital banking. And this is only one continent. With a global trend on the rise and more digitally-excluded third-world countries opening up for online banking services, the need for regulations is greater than ever. The Revised Payment Services Directive (PSD2), the Anti-money Laundering (AML5), eIDAS Regulation or GDPR are examples from Europe alone.

What’s hot?

Further increase in automation will reduce the time of many things. Automated Know Your Customer (KYC) is done in seconds, as opposed to three days in a traditional bank. Credit risk assessment is built on artificial intelligence (AI) and machine learning (ML).

Self-service, mobility, and customer enablement drives the need for additional pro-customer tools. Predictive modeling, digital, and maybe even voice assistants, higher integration of algorithms – according to various reports (Deloitte 2018, 2020) this seems to be the future. 

Further adoption of different APIs will enforce data standardization but many companies will be struggling to keep up. Data mess isn’t exactly the end of the world, it can be dealt with. The real challenge comes from driving conclusions based on the available data. Big data and AI/ML solutions can help.

If technology is king, customer is the emperor

Technology is only a tool – let’s return to that statement. Despite tech-centricity in publications across the board, algorithms and automation alone can’t win the battle for loyal customers. They can significantly help and a clear strategy means a lot. The priority, however, is people. Digital transformation IT services should go beyond the code and provide a complete digital experience.

Process digitalization saves you time and money. With automation, you can focus your employee’s attention on meaningful tasks. A good example is Société Générale – a finance digital transformation gave the bank digital maturity and a “strategic continuity” award for the overall technological shift.

That’s where employee enablement comes in. With a high-tech workplace environment, they can present your products in a more engaging way, winning over clients and inspiring the unconvinced.

Digital transformation allows you to spot bottlenecks in app performance and customer acquisition. That means a more natural, engaging and real-time experience for any person deciding to take advantage of your offer. The more information you have, the more direct communication you can create, leaving customers happy and constantly returning for more. This is why it’s worth it to elevate your business.

Anarchy, monarchy, diarchy

Anarchy is when the rule of law doesn’t exist. Monarchy is when the king makes the law. Diarchy is when you have two political powers ruling simultaneously. Nobody wants anarchy in fear of unfavorable market conditions. Some like the idea of the king (technology) running the show, but that’s not sustainable in the long run. The perfect situation is where there are two centers of power – the king driving the financial aspect and the emperor (customer) deciding on everything else. It’s the place where digital transformation in banking truly shines.