In financial services, fintechs are promoting the vision of a world without banks. Blockchain and cryptocurrencies have taken over paper money or credit cards. Portfolio management is conducted in an AI setting without managers. Mobile and online payments are turning to debit and credit cards. In short, Fintechs are delivering a fast, seamless, immersive, cross-channel digital experience that customers have always wanted. It is meeting their needs and bringing so much more to them than they can anticipate. For Millennials, this is incredibly good news. As a key demographic, millennials’ expectations of brands are changing rapidly and they have radically different banking and investment habits, making it clear that banks must adapt.
To understand how traditional banks can compete with fintechs, we reached out to Sudipta Kumar Ghosh. He has over a decade of experience in the fintech sector and is one of the few leaders to lead the technology transformation for large banks. He has an MBA from Northwestern University’s Kellogg School of Management.
- Tell us why it is the need of the hour for banks to adopt fintech?
The traditional banking system will not survive unless it adapts to the fintech revolution. After the arrival of the COVID-19 pandemic, it forced the entire industry to provide consumers with digital options where they did not exist earlier. The daily life of the consumer suddenly went digital and their expectations for digital experiences have reached their peak. It also became clear that digital capabilities alone were not enough as consumers also needed the technologies they were using that were as fast and easy as the major big tech and fintech companies. This makes it very important for banks to create innovative products that can provide better customer experience. Unlike before, having digital functionality is no longer an option – it’s a must.
- Do you think banks are working on any transformational strategy?
Yes absolutely. Banks are aware that they need to reinvent themselves and are already working on actionable strategies. In a recent study by Microsoft on the financial sector, 73% of survey respondents said that at least 50% of their customers’ financial activities switched from personal services to digital services in 2020. Most of the respondents to this survey also said that their organizations not only used many CX technologies during the COVID-19 pandemic, but also plan to continue to use them. Smartphone apps and mobile responsive websites (81%), customer onboarding and feedback automation (62%), and AI-powered predictive analytics (51%) are some of these technologies.
- So, from your experience leading the digital transformation for banks, what should banks consider when building digital-first products?
Here three things should be kept in mind.
The first is to make banking personal and seamless. The customers will use various channels like mobile, web, touch-free to interact with the bank. This means that there must be fluid, streamlined, integrated, seamless and personalized consistency for the customer across all touchpoints. Also, cross-channel consistency is critical to meeting (or exceeding) customer expectations and generating loyalty.
Secondly, banks need to use state-of-the-art technologies available. They should use cloud delivery platforms to ensure that websites and apps are always available and that every customer will enjoy optimum performance regardless of location or device type. Using the latest tools and techniques to collect data from cross-channel and multi-device interactions for analysis, recognizing recent activity and providing personalized services, and also offering promotions in each session is the need of the hour.
The third is to reduce cyber security threats. Today’s online threats continue to grow in size, frequency and sophistication, putting banks at tremendous risk of reputational damage, low IT productivity and revenue loss. Think about encrypting and tokenizing sensitive data, appropriate governance models for data on the cloud.