The unprecedented rate of digital transformation happening across the globe is also making deep inroads into the banking sector. Continue reading to learn about the advantages of large-scale digitization in the banking industry.
Digitization is the process of converting data stored in physical files into electronic or digital format and is the first step toward the end-to-end digitalization of business operations. In today’s dynamic business landscape, organizations across all industries are recognizing the significance of digitizing data and going paperless as a crucial strategy to retain a competitive advantage. With digitalization making an impact on all aspects of the modern world, it is imperative for banks to recognize the role of digitizing in banking operations and embrace it on a large scale.
Over the years, the banking industry has undergone a plethora of changes. From ATMs to internet banking and mobile banking, the innovations are plenty and have transformed the entire face of banking. As a result, banks are facing an increasing demand to transition their operations to digital platforms and offer digital banking services to the public. In this scenario, digitization evolves as a critical tool for the banking industry to shift from traditional paper-based operations to digital mode, thereby redefining banking operations and customer interactions. Digitization also enables financial institutions to offer enhanced security and service efficiency to their customers and hence there is a growing preference among consumers to switch to electronic banking.
Here are a few interesting facts:
- Research shows that in 2020, 1.9 billion individuals were using online banking services globally. This figure is projected to increase and touch 2.5 billion in 2024.
- A recent survey revealed that in the US more consumers are using digital banking with 61% interacting with banks weekly through digital channels.
How digitization can improve banking services?
- Convenient and digital-first banking – By introducing digitization in banking operations, banks gain access to a technology-backed platform that ensures innovation and adaptability in their operations. The banking process has now become convenient, easier, and safer for all. In the past, banking was a time-consuming process where customers had to visit a branch, wait in long queues, and fill out forms for each individual transaction. However, this has changed with digital banking. Customers can now use online banking services from the comfort of their homes and avoid physical visits to the branches. Apart from convenience, this also ensures safety as the need to handle cash is reduced considerably. Cashless transactions also reduce the threat of fake currency and corruption. Furthermore, digitization enables banks to focus on innovation projects that use advanced technologies such as biometrics, blockchain, and virtual reality.
- Increase operational efficiency – Banks have also been able to cut down on paper usage and manual labour which has reduced operational costs significantly. Digitization supports end-to-end automation of all banking operations. This eliminates repetitive tasks and thereby enhances productivity. As digital data is more accurate and easily accessible, banks are now able to take data-driven decisions and meet the evolving dynamics of the internet era.
- Improve customer satisfaction – Digital transformation can profoundly improve the customer experience by creating a highly efficient and digital-first banking environment where customers can execute all their banking activities without any need for interacting with the bank staff. Banks can easily incorporate a personalized touch and cater to the specific needs of the customers with products tailor-made for their unique needs and aspirations. Besides, the incorporation of digital operations helps banks to increase their customer base by expanding to rural areas.
Future of digitization in the banking industry
In recent years, the banking industry has witnessed significant transformations that were fuelled by the emergence of fintech, the need to attract millennials, and the growing demand for digital banking. The changing scenario makes it imperative for banks to evolve and redefine their operations in order to ensure efficient banking. Additionally, banks also need to examine how they can provide more personalized customer service using digitalization to improve customer experience.
Digital transformation and new technologies like AI-powered chatbots can play a crucial role in helping banks stay competitive and adapt to the digital age. Nonetheless, technology also brings some challenges that must be addressed, including cybersecurity threats and issues with personal data privacy.
At SBL, we are already playing our part in maximizing the opportunities presented by digital transformation. Indeed we specialize in data conversion, document management, and digitization services for the banking industry. Our digitization professionals ensure smooth and flawless digitization while simultaneously guaranteeing accuracy and data security.
We have worked with a number of financial organizations and among our accomplishments is the digitization of very large amounts of records for the biggest nationalized bank in India. Leveraging our deep industry exposure, we ensure quick and cost-effective digitization of documents, which makes it a great solution for banks looking for a simple and fast way to adapt to new regulations.
Contact our digitization division today to learn more about our innovative solutions for the banking industry.
Frequently asked questions
1. When did digitalization start in the banking sector?
Digitalization of banking can be traced back to the 1960s when ATMs and cards were introduced. This further gained traction with the rise of the internet in the 1990s.
2. How is digital banking useful to banks?
Financial services will be increasingly digitized in the future. Digitization in banking provides many advantages, including:
- Analysis of data and insight into customers’ behavior and patterns.
- A more personalized and interactive customer experience.
- Offers bank the opportunity to offer a wide range of new services and products to their customers.
- It allows easy access to customers through several channels, such as mobile, online, and chatbots.
3. What is an example of digital banking?
Internet banking is an excellent example of digital banking. Customers with online bank accounts can manage their accounts online, check their balances, make payments, transfer money between accounts, and contact customer service. Benefits of digital transformation in banking include the wide portfolio of services that banks can now offer that was not previously available with traditional brick-and-mortar banks, such as being able to manage their money from anywhere, investing in stocks without visiting any physical branches, and transferring money internationally for much lower fees than those associated with traditional wire transfers.
