OPPORTUNITIES AND CHALLENGES
Banking involves accepting deposits (money) from and on behalf of the customer, providing loan to the customer and performing other services such as; providing investment and insurance services. Banking in this digital age involves the use of technology to generate, store and process transactions effectively and efficiently.
However, there is a wrong perception of the term ‘Digital Banking’ in today’s nancial world. Digital Banking is seen by many as mobile banking or online banking; it is also seen as an add-on to existing and traditional/conventional banking system. Digital Banking does not only encompass mobile banking and online banking, it has a broader picture.
What then is Digital Banking?
Digital Banking is the application of technology to ensure quick and effective processing of banking transactions/operations to ensure availability, operating cost reduction, zero errors and improved services to the client and the Bank. It involves delivering banking services over the internet and high levels of process automation and web-based services.
Some of the benets of banking in the digital age to the customer and the Bank include:
Ø Improvedservicesandproductssuchas; Improved availability through personal computer, banking applications,
banking that meets the customer’s needs etc.
Ø Lower operating costs through the elimination of costly operations, fewer or no errors, less branches will be required – a minimum number of Staff will be required.
Proling of customers for nancial products
Banks can easily identify protable customers and improve signicantly in marketing. This reduces time, effort and money wastage.
Engagement with the customer
There is room for improvement in engagement with customers. Customers want a digital experience when they need speed and human interaction when they need advice on products or investments. Banks need to combine human interaction with digital speed and self-service functionality. Engagement with the customer is vital for growth because it
will distinguish a bank from the rest.
With the advent of digital banking, customers do not stand in long queues to deposit money or make withdrawal. Everything is now done on smartphones. A digitized journey makes customers happy. It also relieves staff for more valuable tasks such as relationship management.
Redene customer journey
Data analytics enables banks to understand their customers better, identify business opportunities and reduce costs. It helps to predict defaulters, study customer proles and forecast risks to plan solutions.
This is one of the challenges digital banks face. With the consistent innovation and improvement in technology, banks need to keep up with the latest technology to prevent obsolescence, wear and tear and outdate of technology.
Cyber risks (the need for increased and more proactive security)
Digital Banks that as driven by technology-driven are exposed to cyber risks. Reliance on the adoption of new technologies and a much more connected digital ecosystem makes mitigating cyber risk necessary in
digital banking. Banks should continually think about cyber security before making key decisions on changes to systems and processes.
Convenience and the reduction in customer loyalty Customers are no longer constrained by conventional bondwiththeirserviceproviders. Banks are now forced to change the way they engage customers, who
are now exposed to digital offers from ogies.
Automation and the future of work One of the most important challenges is the impact of automation on traditional labour force. We need to be careful when adopting automation. It is therefore our duty to understand the impact on jobs and help with the movement of the labour force to brand new roles and responsibilities. This will not only be a responsible growth but will have
a positive impact in the future.
Banks need to consistently strive to keep up with trends and meet the core needs of its customers. A bank that is digital is efficient and effective.
In conclusion, with the advent of FINTECHs, there has been a major dominance in the payment sphere. FINTECHs proliferated in a bid to side-line the traditional nancial system and to ensure efficiency and speed in service delivery.
However, Banks are unlikely to lose their place in the nancial system in the future. Strategic partnership should exist between Banks and FINTECHs to make it a win-win. It is therefore mandatory for the banking industry to evolve digitally in order to serve customers better. The idea of banking in Nigeria is changing from conventional/traditional to convenience banking.