Digital Banking – What Is It Really?
If you are a banker, techie, agent or most importantly a customer in BFSI Segment, I would take it for granted you must have heard the new buzz word “Digital Banking KBC head office Contact number “. In my circle, I did chat with several people and interestingly, no two persons seem to perceive this in same manner – well, this is kind of exaggeration, but you get the picture! This made me take a pause and think what this could mean to someone like me who is an insider in the industry, to answer if a colleague, friend, or someone at my box asks me about this. As a true CrossFit athlete I follow at least the first rule – tell everyone you come across about CrossFit.
The reason I bring up CrossFit is not just because of my fascination or, even obsession. CrossFit is a bit of complex and daunting to those uninitiated, but to put it simply it is strength and conditioning program, which optimizes fitness. CrossFit defines fitness itself in terms of 10 components – Cardiovascular Endurance, Stamina, Flexibility, Strength, Power, Speed, Agility, Coordination, Accuracy, Balance. But, typically if you ask any of your friends what is fitness, you might get multiple responses. E.g. a runner will say ability to run half-marathon, or a weight lifter might say deadlift of at least 1.5 x body weight, or a guy into yoga might say doing 108 Suryanamaskaras. Well, each of them may be right in their own way. Your definition of fitness may be doing all of those, or you could just say I am fit enough if I am able to do my 9-to-5 job without taking any sick leave in an appraisal cycle.
On the same lines, banks could interpret Digital Banking in their own terms and similarly, people like you and me will have formed some opinion based on our own exposure.
Over the years, banks of all sizes and shapes optimized a lot by adapting to IT / ITES (IT Enabled Services) and they have achieved varied degrees of success. However, due to lack of focused and longterm approach, creation of disjoined systems, rapidly changing business and operating scenarios, etc., the intended goals might not have been fully realized. Some of those “failed” initiatives could have been driven by the institution’s urge to be an early adaptor of a technology or trend (betting on a wrong horse). On the contrary, we might lose a huge opportunity, if we don’t recognize and bet on a winning horse. So, the trick is betting on the right horse, at a right time – i.e., when the odds are low. Typically, industries use what is called a Hype Cycle to evaluate a new technology or trend. If you are interested to understand what is a “hype cycle”, please see Gartner’s methodology. I will try to string together some of the key aspects of Digital Banking, as unlike most of the buzzwords, it is neither a single service nor a technology.
Just around the time (2008-10) I spent about a year plus in Brussels, three big banks (Fortis, Dexia and KBC) which always came across as extremely risk averse bankers from the BeNeLux region, started facing major pressure and their value eroded significantly and triggered heated debates in the community – who thought their money is always safe with the banks (either as a depositor or share holder). What really happened there, is very complex. Key factors being, huge sovereign debt hovering between 84 to 99% of GDP, lack of Government for 533 days, etc. These triggered liquidity issues. If you add to this other upheavals in the banking industry globally, it is easy to realize that the “trust” within the system was under threat. How would we build trust? By being transparent. Customers need (not want!) transparency in the whole system. Younger the customer base, that need felt is more acute. This, when you look from the changing customer experience and expectations from retail industry (Amazon, Flipkart), transportation (Uber, Ola), food industry (Zomato, FoodPanda, ZaptheQ), you know where the banking industry is. Customers have reset the expectations in terms of value, experience, and options. The Key takeaway for the banker – User Experience – rich, uniform, mobile (anywhere), secure, enhanced value.
Many people I have interacted with recently on this topic, opined Internet Banking or Mobile Banking as Digital. Yes, this is only the beginning of what could be Digital Banking. Probably, they cover earlier set of customer expectations. Moving on, could we see a day soon, where there is no paper in any of the banking transactions? When I say paper, I am not just referring to currency! Few things which are already in practice in few banks and gaining momentum across are – digitizing processes within the bank (like customer on-boarding, loan application), cheque truncation systems which allows you to take a photo of the cheque on your mobile and send to your bank, etc. – there by bringing efficiency in decisionmaking, ability to customize processes to specific customer requirements, save some unnecessary trips to the branch, etc. This could mean in other words, implementing document/ image management systems, business process management and monitoring systems, integrating these components within the existing IT solutions. The Key – digitizing internal processes.