Digital Transformation in Banking Summit - Singapore

25th August, 2022

What is Digital Transformation?

Digital transformation is an integration of various digital technologies (such as AI, RPA, Blockchain, Cloud Computing, IoT and more) into all areas of business, fundamentally changing how you operate and deliver value to customers.

Digital Transformation is once in a lifetime technology shift journey of strategically planned organizational change. It starts by empowering our teams with new methods to create a highly responsive strategy and fearless culture of innovation.

What are the benefits of Digital Transformation in banks?

Successful digital transformation does not come from implementing new technologies but from transforming your organization to take advantage of the possibilities that new technologies hand over.

1. Business efficiency Not only do digital platforms improve interaction with customers and deliver their needs quickly; they also provide methods for making internal functions more efficient.
2. Cost savings One of the keys for banks to cut costs is automated application that replace redundant manual, which further improves workflow.
3. Increased Accuracy By simplifying the verification process, it’s easier to implement IT solutions with business software, leading to more accurate accounting. Financial accuracy is crucial for banks to comply with government regulations.
4. Improved Competitiveness Digital solutions help in managing marketing lists, allowing banks to reach broader markets and build closer relationships with tech savvy consumers.
5. Customer Assurance Digital Transformation helps organizations in Big Data by managing large amounts of customer information to generate a more individualistic and personalized service, which favors loyalty.
6. Greater Agility The use of automation can speed up external and internal processes, both of which can improve customer satisfaction and empower them with personal finance education, financial services, and financial products.
7. Enhanced Security Diving beyond digital transformation into the realm of disruption, the adoption of blockchain into banking will revolutionize payments, identity, and security.

What are the key drivers for Digital Transformation?

1. Customer expectations continue to rise Each time a customer is exposed to a new digital experience; their expectations are immediately reset to a new higher level.
2. SPEED is more important than ever By the time organizations devise a perspective on how to respond to an opportunity or threat, the world has changed by an order of magnitude.
3. Customer insight continues to be essential Being able to rapidly respond to the expectations of today’s empowered customer clearly starts with a strong focus on customer insight.
4. AI is front and center “If you don’t have an AI strategy, you’re going to die in the world that’s coming.
5. Consumer Experience Consumers becomes tech-savvy, socially active and selective in their purchases. They prefer products and services that are personalized, matching their tastes and preferences.
6. Business Processes Market place becomes more dynamic and adaptive to the new business processes. Enterprise building agile process helps to reduce lead-time for new product development and in addressing customer complaints.
7. Operating Model Digital wave has not only changed the way enterprises operate but also how employees communicates and engage with customer.

What are the implementation challenges faced by Digital Transformation?

1. Unclear business case Skepticism or regulatory concerns are legitimate reasons to be careful when investigating new technologies because of the cost constraints.
2. Regulation and reputation Companies, especially in financial services, are taking a slow approach to social media for fear of regulatory sanction because of security concerns as it can have reputational repercussions beyond any regulatory penalties.
3. Multichannel strategy Creating a multichannel strategy that includes the web as well as emerging technologies such as mobile and social media is not an easy task.
4. Open banking There is a threat of risk challenge for traditional banks as the customers share their data with the financial institutions to execute direct transactions without going through the bank, which cannot be controlled.
5. Money laundered through open investment Transaction platforms that never raised fraudulent suspicions before are now used to move money internationally by fake investors, scammers and terrorist.
6. Aligning business and IT challenge Digital transformation, as the legacy system of banks was never designed to handle the complex applications and services of today’s digital landscape.
7. Data challenge The data economy has shifted into a “decision economy” where the business that makes the best insight-driven decisions faster than its peers will gain a competitive edge.
8. Technology Integration Challenge The integration process for new technologies causes delays as employees face acceptance, training and getting accustomed to new data management techniques.
9. Cultural challenge Changing culture will always be more difficult than changing technology, and that’s why it’s important to proactively address the changes needed to instill a digital culture.

Big Pieces of the Digital Transformation Puzzle

1. AI (Artificial Intelligence) AI is creating intelligent machines using computer science ideology. It emphasizes on giving machines access to objects, categories, properties and relations between all of them to implement knowledge engineering, in order to make the machine work and act like human beings in every aspect. Apple’s Siri can be taken as an example of AI.
2. IoT (Internet of Things) The Internet of Things (IoT) is a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.
3. Cloud Computing Cloud computing is the delivery of different services through the Internet. These resources include tools and applications like data storage, servers, databases, networking, and software. It is an ability of storing data, processing data and accessing data via Internet from anywhere in the globe.
4. Blockchain Blockchain is a technology that uses distributed databases and cryptography to record transactions in an ever-growing system of interlinked records or ‘blocks’ all synced with identical information. A blockchain functions as an open, decentralized ledger that effectively keeps track of transactions between two parties in a permanent and verifiable way.
5. Big Data Big Data is the term that describes the large volume of data- both structured and unstructured- that inundates a business on a day-to-day basis. Big Data can be analyzed for insights that lead to better decisions and strategic business moves.
6. Robotic process automation (RPA) Robotic process automation (RPA) refers to software that can be easily programmed to do basic tasks across applications just as human workers do. The software robot can be taught a workflow with multiple steps and applications, such as taking received forms, sending a receipt message, checking the form for completeness, filing the form in a folder and updating a spreadsheet with the name of the form, the date filed, and so on. RPA software is designed to reduce the burden of repetitive, simple tasks on employees.
7. Virtual Reality Virtual reality (VR) refers to computer-generated environments or realities that are designed to simulate a person’s physical presence in a specific environment that is designed to feel real. The purpose of VR is to allow a person to experience and manipulate the environment as if it were the real world.

The process of transformation towards digital banking

1. Responding to the new competition At an initial stage, banks react to changes in the supply and demand of financial services by developing new digital channels and products with which to position them in the new competitive environment.
2. Technology Adaption The second stage in the banking digitalization process consists of making an in-depth change to the technology platform, to convert it into a more modular and flexible infrastructure to enable the assimilation of new technologies, as well as to speed up the development of new products.
3. Strategic positioning The financial institutions, which are furthest down the road in the digital transformation process, try to make their major investments in technology pay off by adopting digital strategies that involve dramatic changes to their organizational structure.

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