The Digital Banking Path

Erick Vargas | May 17, 2021

For several years now, digital demands on the financial market have been on the rise. With the pandemic crisis that began in 2020, the need for digital banking services became even more prominent. Providing online options to users is now a requisite for any financial entity that wants to maintain a competitive advantage. For financial organizations, upgrading and adapting is imperative, as is adopting a digital transformation that brings more flexible and efficient business models. 

But what exactly does the digital transformation of banking imply?

Evolving with Technology

At a basic level, the digital migration of a financial institution involves providing a digital platform where its clients can access online services. It consists of offering options such as viewing account balances, making payments, opening a new account, transferring money, requesting credit cards, and more. This type of platform is crucial for the customer since it allows them to view information and manage their personal banking 24 hours a day without visiting an actual bank branch. In this aspect, mobility is paramount: clients increasingly demand access to digital banking services not only from their computers but from their mobile devices. Financial institutions have to satisfy the mobile need if they wish to maintain a competitive edge in the market. 

However, digital transformation goes one step further than providing online services for clients. It implies the adoption of technological tools with which the organization can optimize and use to improve its operations at an internal level. Setting up internal digital platforms to speed up processes increases productivity and facilitates internal management controls, improving security. Moreover, implementing tools such as data analysis and business intelligence leads to more precise and efficient decision-making in all areas, from client acquisition and retention to risk evaluations to development and innovation, and much more. 

Digital Transformation and Agile

Nothing stays still for long in technology. This premise must always be kept in mind concerning digital transformation. Being able to adapt to change is one of the most crucial aspects for any financial entity that has started down the digital path. Technological advances and changes force entities to respond rapidly to the demands of the sector.

Once more, the adoption of internal technological tools is vital. On occasion, financial institutions are limited by data protection policies, security measures, and the internal bureaucracy of many processes. These can be more easily managed when organizations employ digital tools that optimize operations, allowing them to adapt their policies and procedures to meet the demands of the market and the needs of their clients. 

Consequently, digital transformation should not focus solely on the digitization of external services. It should begin with an internal transformation process that encompasses the whole organization: from adopting technology and digital strategies to changes in its culture. Here is where the implementation of agile methodologies becomes an invaluable work tool. In short, these methodologies “adapt the work to the project’s conditions, achieving flexibility and immediacy in adjusting the project and its development to the specific circumstances of the environment” (IEBS). Adopting this work method allows organizations to manage their projects with much more flexibility, autonomy, and efficiency, leading to increased productivity and lower costs. 

Organizations are becoming more and more aware that they can only achieve real business agility through the efficient alignment and coordination of all aspects of the company, and banking is no exception. Of all the firms that participated in the most recent State of Agile report, 17% belong to the financial services sector. This places the industry in second place after technology (27%) when implementing Agile strategies. It is clear that the adoption of Agile grows stronger and stronger in the financial industry, playing a crucial role in the digital transformation of banking.

Benefits of Digitization 

The following are just some of the benefits brought by digital transformation:

 

  • Process optimization - implementing digital tools optimizes internal processes, improving the operational efficiency of financial institutions and reducing human errors in any dealings with customers.
  • Cost reduction - having access to banking services from their mobile devices means clients can self-manage their finances without the need for any intervention, reducing customer service costs.
  • Enhanced user experience - digitization strives towards a user-centered model that allows financial entities to improve their user experience comprehensively. Implementing technological solutions to provide personalized products and services leads to client loyalty, improving conversions simultaneously. 
  • Greater precision when making decisions - with digital transformation, data becomes one of the most important resources an organization can have. Using Big Data or applying Business Intelligence allows for more dynamic decision-making, providing a more profound knowledge based on data that leads to more precise decisions in every sphere of the business. 

 

Currently, any financial entity that aims to grow needs to make mobility and technological innovation a priority. Even though the digital migration of services may imply adopting new business models and may appear to be a challenge, carrying out this process alongside an experienced technological partner makes all the difference. Decades of being involved in the technology industry have left Avantica a legacy of knowledge and expertise that easily adapts to our clients’ needs. We provide custom-made integral solutions that prioritize security. Our trajectory has made us experts in digital financial transformation. No matter the digitization project, at Avantica, we turn it into a reality on the first try. 

 

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KEY TAKEAWAYS

  1. The digital transformation of banking implies providing a digital platform where clients can have online access to services as well as the implementation of internal technological tools that improve the organization’s operational efficiency.
  2. For any financial entity set on the digital path, adapting to change is one of the most crucial aspects, making the adoption of agile methodologies an invaluable work tool. 
  3. Benefits of digital transformation include cost reduction, improved user experience, process optimization, and greater precision when making business decisions.

 

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