Sunday, September 25

Digitization to meet the challenges of the banking sector

digital banks as an alternative to traditional banking open banking financial sector banking sector

In recent years, the banking sector has undergone an important digitization process, to the point of becoming one of the most advanced sectors in this transformation process. This digitization strategy, motivated by being able to face the pandemic and allow its clients to continue operating, has meant that the majority of transactions are now carried out in the digital environment.

In this sense, according to the latest Report on the Spanish banking sector by Funcas, investment in technology in the sector has grown by 71.8% in the last five years. An investment that is very well perceived by users in our country and that translates into the widespread use of digital banking. The latest MPIx index from Smartme Analytics concludes that in the last year the use of banking apps has grown by 24.8%, totaling 84.5% of the Spanish digital population.

The rapid evolution of technology, the appearance of new competitors and the expectations of customers, now accustomed to an innovative and digital sector in real time, who demand even more facilities thanks to digitalisation, create new opportunities that the sector must deal hand in hand with technology. For this reason, Entelgy, The BusinessTech Consultancy, as an expert in digitization for all sectors, points out the challenges that the new digital banking must address in order to maintain the success of its digital transformation process.

Knowledge and ‘ad-hoc’ analysis of the consumer

Never before have there been so many tools to analyze customer behavior, and even anticipate their needs. The implementation of digital banking generates a large amount of information about customers: usage trends, profiles or preferences, which is known as a digital footprint.

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The challenge facing banking in this regard is to take advantage of this data and convert it into valuable information that can be used in making business decisions. To do this, it is necessary for banks to implement Big Data solutions, but that are not simply limited to collection and storage, but rather allow conclusions to be drawn that help them in the task of learning more about their consumers.

In the Spanish banking sector, investment in technology in the sector has grown by 71.8% in the last five years

In recent years, the sector has tended towards hyper-personalization solutions that lead to an individual understanding of each client in an automated and efficient manner in order to improve the quality and experience of users, offering products that are fully adapted to their needs. Knowing how to detect these needs in real time and manage the data in a personalized way will be key to retaining and attracting new customers, especially if it is achieved before the competition.

Recover the profitability of the sector

The arrival of fintech completely revolutionized the financial sector. The entry of new players in a market that until now had been totally dominated by companies with years of experience, catalyzed the digitization of the sector and forced traditional players to adapt to a new reality in which new products were offered without commissions or fees. service charges.

This is presented as one of the great challenges of banking, because together with the obligation to implement low interest rates after the global financial crisis of 2008, it has notably deteriorated the profitability of the sector. With an increasingly competitive sector, banking is committed to reducing costs thanks to digitization.

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The consulting firm Gartner states that organizations could reduce their operating costs by 30% thanks to hyper-automation together with a rethinking of process flows. While other studies by the Bank of Spain suggest that “machine learning” applied in areas such as credit risk control, can result in significant savings of between 12.4% and 17%.

Fast, secure, efficient and digital customer service

Customers, now accustomed to the benefits and comforts of the digital band, are increasingly demanding and need faster and more personalized attention. In this sense, the challenge for the sector is to be able to meet their demands while their operations move to the online environment and close physical branches.

This relationship is fully compatible thanks to the implementation of technologies such as chatbots, which are increasingly common and more capable of holding conversations and finding solutions to problems. This makes it possible to pass the first phase of the contact without the need to have a person pending, solving the simplest issues and prioritizing the more complex ones that need a person behind.

The move to the digital environment means that threats also proliferate, but as these technologies develop, they become increasingly sophisticated and capable of identifying apparently fraudulent activities. For example, by applying Process Mining technologies, anti-fraud systems will be able to analyze monetary transactions of credit payments, card movements or purchase patterns, alerting when they may appear to be fraudulent.

“Digital transformation is not just a technical change, it must be a comprehensive change that goes through the business mentality, business processes and the relationship with our customers. The banking sector is an example that digitization cannot be sustained only by implementing technology, that once a transformation begins, companies must continue working to be increasingly efficient, flexible and innovative, and that is the current challenge of the sector ” commented Javier Ferrari, Business Director of Financial Services.

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