Digital innovations have revolutionised governance, agriculture, education and enterprises in ways that were once unimaginable. The financial sector is another area that has seen significant improvements with digitalisation and the banking industry in particular has benefited greatly from digitalisation.

With digitalisation, banks have been able to introduce innovative products and services and new business models, automate and optimise processes, improve value chain, and speed up the adoption of technologies.

These are some of the key areas of banking that have been impacted by digitisation.

Innovative products and services

Digital banking is a concept that has come with digitalisation in the banking sector and banking app development has made banking a simple and convenient task. Accessing an account, transferring cash and making payments have been made so much easier through mobile apps.

An account holder no longer needs to visit a physical bank and waste time in queues or fill form after form as banks have now simplified these time-consuming processes with mobile banking application development.

In addition to mobile banking, video chat advisory, product personalisation, and online finance tools have also been introduced with digitalisation in the banking sector.

Non-fungible tokens or NFTs are perhaps one of the most innovative technologies introduced with digitalisation in the banking sector, with our perception of what amounts to currency changing entirely.

However, digital innovations have not revolutionised banking for consumers only. The way banks function and how banking services are carried out has been made more efficient with the use of innovative products and services.

Cloud computing, big data and analytics, data encryption, and blockchain are other technologies that have optimised banking processes and strengthened security.

Business models

Banking relied entirely on brick and mortar establishments for a long time, but this has changed with digitalisation. Today, there are banking channels that are entirely digital, eliminating the need for brick and mortar establishments. Pure digital banking has virtual products and services and utilises mobile and other digital platforms to offer consumers a complete banking experience.

Payments bank is another business model worth making a note of. Payment banks cannot issue loans or credit cards and typically accept a restricted deposit. This business model promotes financial inclusion and is ideal for bill payments and remittances.

A third business model that has been impacted by digitisation in the banking sector is customer-centric banking, where digital innovations and technologies are used to personalise products and services, provide an omni-channel experience to customers, and improve customer acquisition and retention strategies with the use of data analytics.

Pure digital, customer-centric, and payments banks are business models that have been impacted greatly by digitalisation in the banking sector and innovative digital technologies have made it possible to explore these models, whether as a hybrid model or an entirely new system.

Automated processes

Accessing banking services and processes is seen as a time-consuming process mainly due to the amount of functions that need to be done manually. However, some of these processes can be automated to save customer time as well as increase employee productivity.

A software development company, for instance, can design apps and software to streamline and automate processes in the banking sector in order to optimise operations and increase efficiency. With the right tools and technology, processes can be simplified, digitalised, and automated to improve customer experience.

Banks can also take it a step further by monitoring processes and optimising them even further.

Impact of digitalisation on value chain

If the banking sector wants to adapt to new technologies and enjoy the benefits of digitalisation, financial institutions must support digitalisation across the organisation. Failing to do so may cause value chain disruptions with only some activities being supported by digitalisation.

A few key value chain activities to consider are IT infrastructure of the bank, banking services operations, marketing and sales, human resources, and procurement. Digital innovations supporting these activities can minimise business process disruption and increase efficiency and optimisation across the organisation.

Looking at the banking ecosystem, it is thus clear that the impact of digitalisation in the banking sector is significant but also positive. This is why it is important that financial institutions embrace and adapt digital innovations to optimise operations and improve customer experience.