By: Eric Plasse, Principal
Technology—specifically digitalization—has forever changed our world, and especially the nature of work and doing business within the financial services industry. According to Gartner’s glossary, the definition of digitalization is “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities. It is the process of moving to a digital business.”
With that definition in mind, one can say that nearly every business has undergone some form of digitalization disruption. Powering that movement is digitization—how information is stored, recognized, and transferred using computers.
The power of digitization—and its ability to segment and pull data strategically using data lakes and other information—gives financial services the ability to make better informed, often swifter decisions. With that data as “food,” businesses can better feed the digitalization engine of technology, people, and processes. Technology, plus evolving customer expectations and regulations, have all impacted the need for financial services companies to be more agile, personal, and invest more wisely in technology.
Here’s how institutions in the financial services industry can use digitalization—and ultimately achieve digital transformation—to fuel their business goals.
Emerging technology like Artificial Intelligence (AI), cloud, and blockchain have all been significant factors for those in the financial services industry. Applying to open an account no longer has to be examined by a live person. Instead, AI will collect information in the cloud, review, and quickly determine the next action. Similarly, blockchain and cryptocurrency can help banks process items that need to meet specific regulations before moving to the next stage.
Those in the financial services industry are grappling with ways to continue to build upon excellent customer experience. Mining data and using tools like predictive analytics can allow banks and other institutions to enhance their customer loyalty better programs and deliver a more personal and customized product.
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Self-help services like chatbots, mobile deposits, and e-wallets are all tactics to decrease the friction between the customer and the financial services institution. Tools that enable customers to easily manage transactions online are the expected ‘norm’ and those unable to offer this type of service will lose market share.
While digitalization is mostly comprised of technology, the people who create the processes that then feed the technology are very important. With any significant disruption must come elements of change management. Digitalization has not replaced technology; instead, it’s a way to harness it to enhance the value and overall business. To use technology to its fullest, processes must be reconfigured or built for speed and agility, while also helping to minimize any new risks created from these new tools and technology.
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Consumers are left with so many options for where they bank that traditional institutions will need to truly differentiate and offer a great product and customer experience to maintain their customers’ loyalty. How do you plan to tackle digitalization?