Digital Transformation Has Hit the Bfsi Sector – Are You Ready?
In 2021, Business Insider outlined how the number of digital banking users in the US will exceed 200 million in 2022. A year later, Twilio reported that digital transformation in the BFSI sector had accelerated ahead by 6.5 years – courtesy of the pandemic.
Again, in 2022, a PwC survey of executives from financial services, consumer markets, and health industries, among others, revealed that 60% of the executives viewed digital transformation as one of the primary growth drivers of their respective businesses. Indeed, digital transformation seems to have well and truly hit the BFSI sector, and understandably so.
But there’s still a long way to go. A 2022 article by the Financial Brand revealed that insurers and executives from retail banks considered their business a “beginner” or “implementer” with respect to digital transformation technologies. The same article also brought to light that 90% of the financial services IT budgets were reserved for “maintenance.” Similar numbers were presented in a McKinsey-led discussion, where developers in traditional banks were cited to be spending almost 70% of their time maintaining IT infrastructure and accommodating upgrades.
So, of course, there’s a lot to improve and explore. With this article, we look at the different use cases and applications of digital transformation in the BFSI sector, how such applications accrue benefits for businesses, and how those benefits can be realized with the help of an expert partner.
Use Cases/Applications of Digital Transformation in the BFSI Sector
With a myriad of functions and features that can be evolved over time to make BFSI offerings more compelling, there are a variety of ways in which digital transformation can be applied to solve business challenges.
Enhancing the customer support function is extremely critical in the financial services industry. Whether it’s applying for a loan, getting a new credit card, seeking out financial advice, or troubleshooting an existing account, customers have to interact with the bank’s support staff quite often. Often, different channels are used for interaction; however, institutions find it challenging to collate a case’s details across all channels. The lack of insight into a case can lead to miscommunication and non-optimal resolutions. And this is just one of the problems. Delay in responses, duplication of records, and incomplete information about a customer’s issue — all these issues lead to customer dissatisfaction, churn, and reduced loyalty.
With digital transformation, the process of customer support can be improved manifold by providing prompt responses to resolution requests and increasing the bank’s visibility into each case. From chatbots to voice assistants and intelligent CRMs, institutions are better equipped to reduce the probability of case escalation, bring in human personnel whenever an empathy-based situation arises, empower the support agents with case knowledge and AI-powered recommendations, and incorporate data from across channels to construct a better-informed, consistent service.
With a bouquet of specialized financial products on offer, banks, and other institutions in the BFSI sector can improve their product offering by examining how they can better integrate data to better inform on which products best suit their customers’ needs. This is precisely where the viability of cloud computing comes to the fore. A recent survey revealed that one-third of the applications of financial services companies now run on the cloud. This is great news for the BFSI sector, as it provides greater opportunities to evolve solutions that can help formulate a better product offering.
For instance, through digital transformation, banks have eased the onboarding process of customers who are opening new accounts. Customers can now fill out the requisite form online and be assured of a quick, hassle-free experience while they are in the process of opening their accounts. In another example, through cloud computing and AI, banking and financial services companies can help designers and engineers worldwide gain easy access to their workbooks, enabling them to collaborate and build more complex products or services with fewer rounds of prototyping and testing.
From automating accounting, payroll, and compliance workflows to integrating internal and external data for enhanced visibility and decision-making, digital transformation can help improve the BFSI sector’s existing operational processes. Not only does automation enable a faster, smoother workflow with reduced errors, but it also enables financial services institutions to easily scale, innovate faster, and reduce costs.
In fact, technologies like Intelligent Robotic Process Automation (iRPA) go beyond traditional automation to help financial services institutions address cybersecurity issues emanating from the increased usage of mobile devices, cloud computing resources, and IoT devices. iRPA can help with the analysis of a substantial amount of security data, audit of human and bot actions, and drive proactive threat hunting, security incident response management, password management, etc.
What Technology Elements Should BFSI Sector Embrace to Realize Successful Digital Transformation?
With the advantages that digital transformation can offer, it’s no wonder that the BFSI sector is keen to realize its benefits. However, it’s important to identify which of the various technology elements can help with digital transformation in this sector.
From using AI recommendations to help customer support agents proactively resolve customer issues to employing Generative AI for fraud detection and risk factor modeling, the BFSI sector must embrace AI at every level. While many banks are still in the early stages of digital transformation, they must work on using AI-powered applications to accelerate their progress.
Cloud’s advantages are well-documented; from reduced costs to scalability, flexibility, and ease of use, migrating the workloads to the cloud can help the BFSI sector ease the pressure of digital transformation on their infrastructure, allowing them to focus on business problems rather than operations and implementation concerns.
With data coming from a variety of sources, both internal and external, it’s important for banks to develop analytics solutions that can help them derive value from data points. How does this value come about? With predictive analytics, businesses can identify operational trends and patterns, take proactive action on customer issues, detect fraud faster, and provide more personalized offerings to their customers.
How Can a Technology Partner Help?
An experienced partner can help banking and financial services institutions by:
- Identifying the right technologies to evolve the products, services, and processes
- Assessing the impact of digital transformation and developing a well-defined roadmap that’s aligned with business goals
- Providing guidance on the implementation of new functions and migration to the cloud
- Ensuring compliance with regulations
- Providing ongoing support through technology refreshes and on-demand support
- Providing valuable insights into the latest trends and developments
Want to learn more about how technology can help to improve your business? Reach out to us here.