Getting Digital Transformation Right for Transaction Banking

Nov 21, 2019

Transaction banking is at an inflection point; the industry will see more transformative change in the next five years than it has in the previous 20. Digital technologies are upsetting the competitive order and the roles that transaction banks play in the operations of businesses and the lives of corporates. These same disruptions are also creating tremendous opportunity for banks that can quickly adapt their long-term business strategies.

For banks that are early to the digital transformation game but still want to join the digital revolution, they need to make sure they are focusing on upgrading the structural support for banks and optimizing the back-end processes that use new technologies while offering an interconnected platform.

Adopting only a front-office digital transformation will only help solve the initial problems with customer-onboarding, as well as giving banks the opportunity for tailor-made services and reinvented customer journeys. However, front-to-back digitization of the transaction banking platform will be standard across the industry in the future. To get digital transformation right, several main drivers have been identified that banks should pay attention to.

Digital transformation drivers

Customer experience continues to emerge as a key driver for digital transformation. To ensure a comprehensive digital transformation across their value chain, banks today need to ensure that their digital journey has been duly supported through an able, robust and innovative digital banking platform. These are the five key drivers that banks can prioritize to ensure success in digitization of transaction banking.

1. Choosing the right platform to support growth

If banks want to consistently grow and evolve into the future, choosing a platform that can support that vision is crucial. By implementing a component-based architecture that is scalable, open, and flexible, banks can not only drive down the cost of their back-end infrastructure and create a more efficient workflow. It can also more realistically provide a broader range of services, including real-time processing of payments, receivables, corporate liquidity management, trade, and supply chain finance. Not only will this draw in a wider, more diverse range of clientele, it will also set those banks apart as ones who value the connected customer experience and allow them to monetize data, generate revenues faster and create new opportunities for value creation with open APIs.

2. A connected customer experience

A shift in business strategy with open APIs will enable banks to be open and offer collaborative banking models and value-added services. Advanced technologies like machine learning, data analytics and artificial intelligence are going to transform the connected customer experience landscape. To do digital transformation right, banks need to make an effort to understand their customers across all segments – SMBs, large corporations, and mid-size corporations – so they can offer products and services tailored to every customer segment. Building a modern and intuitive user interface will help drive more personalization for every customer segment. Digital transformation for a bank can also mean creating a competitive advantage by collecting customer data and understanding customer preferences for better cross-selling opportunities.

3. Rethinking data integration

Integration is a primary challenge for banks that inhibits them from offering connected customer experience. While automation can be a starting point as a growth strategy, for building a future-ready bank, the entire banking landscape should be re-architected with a front-to-back digital transformation. Doing so will not only transform the underlying core technology of their existing platforms, but also drive an integrated operating model that allows for the creation and delivery of bespoke products.

4. Accelerating time-to-market

Speed is a primary differentiator to attract and retain new and potential clients, and banks need to implement an integrated platform with open APIs and new technologies to re-design customer journeys and back-end processes to accelerate the time to market. And not only that, but by transforming the distribution model to a digital ecosystem, improving their value propositions and developing end-to-end customer-centric journeys, banks can increase their market growth as well as enhance customer satisfaction.

5. Making the right investment

The trend is moving towards the digitization of banking platforms, meaning the transformation of core technologies has become the norm. Banks can create winning corporate customers by breaking down traditional product silos and using multiple channels to launch structured and personalized products.

In order to stay relevant, banks need to make the transition into digital transformation. Banks are in a unique position to cope with the changing market and build ecosystems for both small and large businesses to thrive. But in order to do so, a connected customer-centric strategy is key. A connected customer experience built through digital transformation that includes an engaging front-end and a robust back-end will drive success for banks. Future-read digital banking platforms need to be established if banks of today want to keep up with the businesses of tomorrow.

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