As we know, digitalization has been a trend in nearly all the industries we can think about, let alone banking. It is generally recognized that digital technology is the way to increase the profit, manage the risk and improve the experience of customers. According to Groenfeldt (2020), Covid-19 has gradually made the remote visit and mobile banking a necessity in our daily life, and we can imagine that this innovation will continue.
Actually, there have already been a lot of digital services for the customers, such as banking APPs and the mobile payment. Now banks are trying to improve their customer experience from some brand-new angles. For example, they are trying to personalize the service and products they provide to their customers. Big data is the core to achieve this goal. Banks are encouraged to use customer portraits to build their customer data platform, which is CDP, as they call it, focus precisely on the demand of different customers, decide quickly, and design the products smartly, and finally distribute them directly to the customers.
However, banks seem to be making progress from the customer aspects, but still have a lot of things to do to insert digitalization into their internal procedure. Now the cooperation technologies for employees in banks are only confined to basic communication tools, but these tools haven’t been connected directly to the business, and employees still need to repeatedly check the confirmation status and do some unnecessary inquiries. API and some micro technologies can be used in this circumstance. If we can simplify the core business procedure which occupies 15% to 20% of the cost, and improve the productivity by 8%-10% by removing the redundant work what have been mentioned above, the banking industry can create a new value of more than 30 billion dollars (McKinsey, 2020).
What’s more, it is highly recommended for the banks to build an industry resource integration platform and create a new cooperation mode. Banks can use API to realize the sharing of data with the third party, which enables customer to obtain financial service from the third party, making banks more open than before. Meanwhile, by this kind of cooperation, banks can make use of the data to innovate and develop new customers with their partners, increasing the customer base and create new business increasing point.
References:
McKinsey, 2020. How digital collaboration helps banks serve customers better. Retrieved from
https://www.mckinsey.com/industries/financial-services/our-insights/banking-matters/how-digital-collaboration-helps-banks-serve-customers-better [Accessed 4 October 2020].
Tom Groenfeldt, 2020. Covid-19 Accelerates Banks’ Move to Digitalization. Retrieved from
https://www.forbes.com/sites/tomgroenfeldt/2020/07/01/covid-19-accelerates-banks-move-to-digitalization/#78b86abf3bac [Accessed 4 October 2020].
Hi Yue, Thanks for your article on banking. I was interested because I just wrote an article on banks cooperating with Google and Amazone in the area of Cloud Computing myself. I think, one of the examples that banks move forward. You argue in your blog that banks need to ‘build an industry resource integration platform and create a new cooperation mode.’ Do you think banks will integrate this solutions, or other companies that already have a platform will incorporate a bank within their own environment.
In a market where the Ant Group is about to have a major IPO, do you think other tech companies will also start offering financial services, making banks redundant? If not, the banks will have to implement the solutions you propose in your blog at a high pace. Making such a cultural and radical change would be very difficult in my opinion.
Anyway, thanks for your blog, and looking forward to any remarks you have.
Hi Abele,
Thank you for your reply! From my perspective, it is more beneficial for banks to integrate this solution, because banks have a strong customer base, and they can use the data, offering better experience for consumers.
When it comes to the threat of tech company, in my opinion, people have a natural trust in banks, and the financial service of tech companies are inseparable from bank. Thus, banks will not be redundant.