The importance of digital transformation as banks look to the future
There is no doubt that the COVID-19 pandemic has had far-reaching implications across the financial services industry. With some institutions facing up to restructuring, and customer expectations evolving, the need to embrace digital transformation and new solutions has never been more apparent.
In a recent report, McKinsey Global Institute (MGI) analyzed the future of the European banking sector after the pandemic, and this underlined just how important it will be to look to technology in the months to come, especially, as the industry moves forward.
According to the study, the willingness to seek, scale or upgrade resource of this kind will be crucial to business success, while digital banking is also expected to be at the forefront.
In Spain, Italy and the US, the use of digital channels will increase significantly (+15-20%) above the average, a trend which will continue to accelerate over the next three years and which in some markets may involve up to 25% fewer branches.
What many banks have realised during this time is that technology, especially in the case of RegTech, is a must and no longer a ‘nice to have’. Customers are seeking services that can be fully integrated in their daily lives and, as such, there is often not the ability or the time to advance legacy processes or tools.
In order to succeed, banks should take this opportunity to push forward with transformation projects that will allow them to realise the benefits of intelligent process automation (IPA). The time is now.
Changing operating models
What has remained is the fact that the customer is king. This means that a fast, frictionless and easy process when it comes to onboarding, in particular, must be guaranteed in order to secure business. With interest rates almost non-existent and customers having time to do research into what else is out there, there is no room for falling short of what is demanded.
We know that the increasing emergence of new technologies has transformed the industry and been central to these rising expectations, with automation reducing costs while also improving the standard of Know Your Customer (KYC) programmes. Another factor leading the digital drive, and that cannot be ignored as we move towards a new year, is the shift to remote working and how this has changed the way many of us, including banks, operate.
The Bank of New York Mellon, for instance, has 96% of its workforce working remotely, while other international institutions have also made clear that they will continue to encourage home working for the foreseeable future.
This change in gear has allowed banks to look at their processes overall and to kickstart projects that, perhaps due to cost or the reliance on legacy technology, had fallen to the bottom of the pile, as they realise that, in an industry that is constantly looking to enhance the consumer experience, reduce risk and comply with regulations, automation is bringing benefits for others in the space, particularly in regards to efficiency and effectiveness.
What does the future look like?
As we all adjust to what the ‘new normal’ means for us, and circumstances across the world change daily, it can be difficult to know what the future will hold, but there is no getting away from the fact that banks are going to have to adapt to tighter regulation, and deal with more intense scrutiny.
This, again, is where automation can prove invaluable, as, with the Encompass platform, the quality of KYC can be maintained quickly and easily, in order to avoid regulatory and reputational risk.
Technology is rapidly changing financial services, with COVID-19 accelerating both the need and appetite for digitalisation. It is those that grasp the opportunity for change and evolvement in line with what their customers want who will reap the long-term rewards.