The Challenges in the Digitization of Banking Services
The biggest change brought about by the technological advancements in this era would be in the dynamics of customer service. Having seen how people have become reliant on information technology is something that banks and other industries have to adapt to. Therefore, it is not surprising that digital banking is the current trend in this globalized world due to clients’ demand for more technological capabilities. This is also why there are non-bank players (Fintechs) that have occurred to provide ways in this new digital banking experience.
Fintechs are said to have played a vital role in innovating the financial services in the market. This has been one of the challenges in the digitization of banking services. Fintechs often work in three various ways: it offers different and easier ways of dealing with payments, provides secure lending transactions, and assists in managing personal finance. Having been used widely by clients, several banks consider fintech firms to be their competitors. They often thought that clients favor the services offered by these non-bank players since they are more efficient and faster when it comes to transaction matters. Hence, banks fear that their customer relationship with their clients on the Internet might stagger.
Another challenge that digital banking industry faces is the complications of regulatory technology (regtech). The industry competes with other competitors who have a stricter regulatory framework. Fintechs even have advanced information technology capabilities with less restrictive regulatory structure. This makes it even harder for banks to level the playing field with Fintechs since they are losing their clients’ trust when it comes to the field of transaction. This can also be the biggest disadvantage on part of the banks since they are supposed to have the most information when it comes to their clients and this information is heavily dependent on the transactions.
Since the current issue being faced by the bank can be detrimental to their status in the financial industry, they still managed to find a way that can somehow address the regtech of the banks with the help of data-driven analytics. Blockchain, which is the combination of cryptography and the said to be the origin of bitcoin, was introduced by the digital banking industry to process the enormous quantity of data in banks. The blockchain is created for the purpose of incorporating all users of a market into a collective database. This means that there will be fewer costs incurred and, moreover, it also promises efficiency.
The existence of blockchains to improve the regtech in digital banking still requires further analysis in order to ensure the level of data privacy that clients demand. Several banking conferences are held to ensure that the information is properly disseminated to the clients as well as to bank employees. After all, the competition in the digital world is thriving and, as users, we must be well informed on how to properly utilize the opportunities provided by the emerging technological advancement in the digital banking industry.
Join Anno Lucis’ Banking in the Transformational Era Conference 2017 on the 23-24 of November in Frankfurt, Germany. Explore the benefits of attending the event and register for the conference at Banking in the Transformational Era: Innovation & Insights Conference Page