Need for Digital banking.
This is the second part of the multi-part series about Digital banking. This blog talks about the need for digital banking.
Digital banking has transformed the way banking is done over the period. In the early years, banking was a privileged facility that enjoyed being the cream of society. Of-late banking services have reached mass affluents and even the lower population segment through micro-finance and last-mile banking. In most countries like India, banking is a civil right offered to every segment layer.
The following infographic talks about the need for digital banking. The dimensions span both customers as well as banks.
Convenience- is the leading factor for both customers and bank employees. Therefore, Bank employees do not have to keep the branch open for extended hours.
Operational efficiency- Banks achieve operational efficiency three-fold: Onboarding customers, account origination, and transactions. Through digital banking, all these essential journeys are automated through self-service, AI infusion, etc., which hardly requires manual intervention. In most cases, the happy path is executed through straight-through processing / Robotic process automation. Human intervention is needed only in exceptional circumstances.
Cost savings- banks' costs per transaction get reduced significantly due to digitization and automation of processes and journeys. There are a lot of banks that even charge a service fee for customers walking into the branch to perform transactions which can be conveniently performed on the digital platform
Innovation hub- As most of the data is digitized, including KYC details, there is a lot of scope for innovation through automation, AI infusion, etc. The following table briefly explains the innovation which can be provided at different layers of banking:
Front Office
· Lead identification
· Product fitment
· Relationship pricing
· Product bundling
· Video KYC
· OCR/ICR of key documents
· AI-based statement/balance sheet analysis
Mid office
· Credit rating
· Underwriting
· Fraud analysis
Bank office
· Reconciliation
· Settlement
· Invoice generation
Broader choices- Digital banking provides more comprehensive options for customers, especially in a super app with ecosystem integration. The selection of products is much more than the bank provides. For example, some banks offer alternate financial products such as insurance. Nowadays, with the convergence of telco, retail, and transportation into the super app, customers get to use the digital banking app as a single platform to take care of their financial and non-financial needs.
