PETALING JAYA: It might be a cliche at this point to call the overall environment as “the new normal”, but it cannot be denied that Covid-19 has had a profound impact on the way we do things, including going digital.
In a move to combat the spread of the virus, consumers have taken to embracing cashless payments, leading to an increase in the usage of digital banking and e-wallets.
Deloitte Malaysia financial services industry leader Anthony Tai said until recently, the banking industry has seen relatively high barriers to entry where new entrants are faced with strict requirements on capital, regulatory approval, and even trust.
However, the rapid advancement of digital technology have eroded these barriers, evidenced by the emergence of non-traditional banking players from various industries seeking to diversify from their saturated marketplaces.
“To stay competitive, traditional banks need to evolve – either through transforming the way they operate or by forging partnerships with these new entrants. Regardless of the strategy, the truth remains – banks must become digital champions to thrive in this new normal,” he said in a statement.
Tai defined a digital champion as a bank that has embraced a business and operating model which is digitally enabled and customer-centric, and pointed out that to begin the transformation process under the business model, the bank will first need to adopt the mantra of “Customer comes first”.
The bank will then be required to conduct a holistic evaluation of the channels used to reach customers and also the design of the products and services offered, including using data analytics to derive deeper insights into customer behavior and their respective segments, and further analysing which product offerings resonate best with the targets.
“Armed with these insights, the digital speed and time taken for banks to create new customised, innovative products and services to be offered now becomes critical. All competitive advantage is lost when a digital bank is perceived to be a laggard by customers,” he said.
Partnerships will also play a key role in a bank’s digital go-to market model. An ideal partnership would involve synergistic players with niche capabilities to augment the bank’s current ones. A successful partnership will also result in a win-win relationship for both parties.
Going in hand with the new business model, is an operating model that addresses technology, operations and assets – without which – a bank may have limited ability to support its customers.
“Automation of processes such as the establishment of a unified data lake, increased usage of automation (i.e. Robotic Process Automation), AI and machine learning, cloud adoption, and Software as a Service (SaaS) should be considered.
“Additionally, the shift from traditional capital expenditure models to operating expenditure models should also be taken into consideration. This means that the digital bank needs to migrate away from owning and operating large scale data centres to subscribing to services from cloud service providers,” said Tai.
At the end of the day, a bank looking to be a digital champion has to completely revamp the way it looks and manages its business and operation models. It requires the bank to put the customer first, and design its products and services around meeting the demand of the customer.
At the same time, the bank needs to be have a strong grasp of the cybersecurity risks it faces and contingency plans in this new normal. The bank that successfully address all this will emerge truly a digital champion.
