Digital Banking in the days to come
The current generation in Bangladesh is growing up with smart devices and convenience services as a greater number of businesses seek to bring their products and services to the doorsteps of consumers. In finance, however, businesses are using smartphones and other devices to bring financial services as close as to the palm of our hands.
For the last decade, the rapid advancement in information and communication technology has significantly influenced our banking industry in Bangladesh. Banks and financial organizations have improved their services as a financial intermediary through adopting various IT solution services.
Technology now has become a tool that facilitates banks' organizational structures, business strategies, customer services and related functions. Bangladeshi banking has come a long way over the last 43 years though still in these days we are unable to do much other than the management of cross-border trade volume increasing.
The banking industry of tomorrow will look very different from what it looks like today - some of what we will see will be evolutionary and some will be radically different. Whilst predictions into the future are always fraught with uncertainty, we are confident that the landscape will be far more competitive, efficient and innovative in delivering consumers 'autonomous experiences' that are not possible today.
The growth in digital banking is showing no signs of slowing down. Convenience, speed and security aren't just extra benefits in consumers' minds anymore. They are now a standard requirement of the rapidly changing customer-bank relationship.
As a rule, traditional bank institutions struggle to build a loyal customer base, while the newly emerging digital-only banks, have all the attributes of a strong brand and can keep customers both happy and engaged with their virtual green banking products.
The market-leading banks of tomorrow will understand that technology will not limit what is possible. Instead, they will harness digital capability to put the customer firmly in control of their destination and preferred model for dealing with their bank and other service providers.
Some consumers will opt for an autonomous banking experience where they are time poor, lack of knowledge and have high levels of trust in their bank to do the right thing by them and confidence in their competence to do what they say they will do. And others will want more hands-on involvement - it will be their choice and winners will be adaptive to their needs.
Banks will transform alongside the shifts in how people work, live and play. We explore the four primary areas that will enhance financial services ability to deliver improved financial wellbeing: data, business models, regulation and emerging technology.
A number of emerging technologies will combine to redefine the bank-customer relationship forever. As technology reshapes how we live and communicate, this will have an impact in a number of ways including a hyper-connected world as the norm, engagement as a service and the rise of the 'super-app'.
Leading banks will become a trusted interface for life, embedded within the needs and lifestyles of consumers. For banks to truly succeed and stay relevant, it has identified six key themes they will need to tackle and own.
There's no doubt that mobile banking is one of the most fundamental parts of digital banking. In the future, we will see even more payment solutions that take advantage of the Internet of things and consumers' state of connectedness. Frictionless, secure ways of payment that support the technology de jour and enhance, rather than enable, digital payment experience will replace the old-fashioned methods.
Many fintech experts argue that what we see today is not digital banking but simply digitized banking. Hundreds year old financial products are being adapted to the digital era and distributed via smart phones and the Internet. That's not so innovative when we think about it. The process can be compared to the transformation that Internet ignited in the media world when we went from reading newspapers to following news online.
Many believe that the real innovation will sprout once the legacy banks and fintech startups move away from modernizing the digital experience and plunge themselves into launching new digital capabilities.
The recent massive influx of new players in the financial services space has caused disruption primarily in three main segments: payments, lending and personal finance. The fintech focus on these three segments because they are the areas where fees can be significantly knocked down (or eliminated entirely) and a strong digital interaction initiated as well as because of the inherent opportunity that comes with it to work better, cheaper and clearer, providing better transparency of what is happening and why.
If instead of using their advantage of speed, agility and the ability to create intuitive user experience to enhance the digital experience these startups zeroed in on delivering entirely new financial products, it would have a much better grasp on the future possibilities of digital banking.
The blockchain is the core technology behind cryptocurrencies like bitcoin or ether and is a peer-to-peer distributed network. It's a much faster, more efficient and less prone to error process than the traditional automatic clearinghouse (ACH) banking, which can save money and time for banks and make payments almost instantaneous for consumers. Besides that, the blockchain's decentralized nature makes it much more difficult for criminals to carry out frauds.
One of the most interesting elements of blockchain banking is smart contracts. Smart contracts allow consumers to exchange money, shares, property or anything of value in a secure, conflict-free way without anyone in the middle to take a cut. Like a traditional contract, a smart contract defines the rules and penalties around an agreement. However, the best part about it is that a smart contract would also automatically enforce those obligations.
The blockchain era gives companies and individuals the power to redefine financial services and create a more trusted, flexible and inclusive space that everyone could benefit from. Although there are still many unanswered questions about this revolutionary technology, it is already clear that the impact it will have on the future of digital banking and the digital world, in general, will be immense.
Digitalisation in banking does not only mean online banking, internet banking, mobile banking or paperless banking rather it is the application of new technologies to transform the existing banking business model into a new virtual banking business model. A model which will itself produce new customer base, unveil new financial services, ensure faster and seamless services to clients with reduced operational cost, zero error, ease of use and apparently, maximum security. Therefore, it's not only a new channel; rather it's a whole new way of transforming existing transaction-based banking into the experience- based banking.
Now a day's the new information technology is becoming an important factor in the future development of financial services industry, especially the banking industry. As a third-world developing country, Bangladesh is far behind to reach the expected level in global banking system. So it is our urgent need to upgrade its banking system as a virtual banking. It has to determine economical prospects of e-banking and to expand the present scenario of banking sectors in Bangladesh and at the same time it should accept the scope and benefits of e-banking compared with the existing system and rest of the world.
The writer is banker