Can traditional banks make the most of disruptive technology?
Disruptive technology is revolutionizing processes in all industries today. In the financial service industry, fintech has been widely regarded as a solution to redundant and traditional processes. The changes brought about by fintech over the last couple of years have seen a huge shift in technology adoption in the financial industry as well.
While many initially felt fintech would be disrupting traditional financial services, the reality is, that fintech has actually made the processes simpler and enabled greater productivity and offering of services. Today, machine learning and AI in fintech are able to complete processes a lot faster compared to a few years ago.
In fact, the EY Global Fintech Adoption Index, a survey of 27,000 digitally active consumers in 27 markets, showed that Asia retains its global leadership in fintech adoption with Hong Kong, Singapore, and South Korea having 67% Fintech adoption, while Australia now stands at 58%.
For traditional banks, while fintech adoption may be slow, the adoption of technology has always been part of their DNA. Over the years, banks have slowly been adopting technology in their systems. But the only difference now is, that they are also competing with non-financial institutions that are offering similar services as well.
The rise of digital banks has indeed been a concern for traditional banks. To remain relevant, most traditional banks are also now speeding up their tech adoption to cater to their customer demands. However, due to regulatory and compliance requirements, the use of some technologies may not be as fast as it can be.
For example, most banks want to run their workloads on the public cloud as it promises greater agility and advanced operational resiliency as well as enhanced business model innovation. But, due to regulations and the use of legacy systems, banks can only opt for private cloud services as they need to have to ensure their data is secured. Cloud companies are aware of this and have since emphasized improving public cloud services for the financial ecosystem.
To understand more about how the banking industry can make the most out of emerging technologies, Tech Wire Asia speaks to Andrew Tan, Group Managing Director at Silverlake Axis. He also shares his views on how digital banking needs to focus on stability.
How can disruptive technology benefit the banking industry?
Disruptive technology inadvertently transforms the banking platform into a larger consultative approach, this automatically shifts the relationship from functional and transactional to experiential and personal.
From a consumer point of view, the expectation of banks in a digital world would be similar to Grab or Netflix. Experience is often positively or negatively impacted by the speed of task completion. Everything from opening the mobile app to making a deposit, transferring funds, updating account information, or establishing a new relationship needs to be tracked. The more intuitive and fast the process is, the less the abandonment rate. The faster the response of channels and the easier the interaction wins customers.
With the push of disruptive technology, banks are driven by consumer demands more than ever hence required to be nimble and customizable at speed to reduce time market. The more agile the development and enhancement process, the faster banks can respond to shifts in customer demand.
In some cases, banks leverage third-party solution providers to assist with improving the time to market. There is no right or wrong way to digitally transform, each bank would have its own path and we understand that but choosing the right partner to execute is imperative to the success of the transformation initiative.
One of the newer metrics that has gained favor is relationship engagement rates. A customer is considered more loyal, and the relationship is often more profitable based on the level of active engagement. The more inbound and outbound interaction, the better the experience.
Gone are the traditional, single measure of satisfaction, digital satisfaction is now measured across channels and for different types of interaction. Without measuring satisfaction with individual experiences, it is difficult to improve the Return on Experience (ROX).
Therefore, disruptive technology has not only transformed banks into customer-centric institutions but revamped their business model with a modern secure, stable and reliable system with real-time problem resolution. This is how a Stable Core system can assist banks to respond to these disruptive technologies on many levels.
Silverlake Axis has helped many banks transform over the years. We were there when ATMs were first introduced in the 80s, then came internet banking. Technology will always evolve but having a Stable Core with an experienced partner can bank transform seamlessly and successfully.
What will “Endemic Covid” mean for digital banking?
With a greater quality of service expectations, digital banking should be able to serve and appeal to the underserved while still being closely monitored and regulated. With new licenses given out, there will be a lot of potential for growth for digital banking.
Growth is very much dependent on user experience. Flexible and more convenient transaction protocols to aid the transition to a much more active lifestyle and payment transactions. We have yet to see consumer behaviors patterns and loyalty of the new generation. Are consumers willing to compromise security for convenience? Are the new generation more likely to trust start-ups vs traditional businesses?
Customer experience will dictate the direction of digital banking. Therefore to be successful, digital banking not only needs an innovative business model that appeals to consumers but also requires a stable and reliable technology.
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