Information driven companies are more apt to be able to leverage digital transformation to be more efficient and cost effective. Banking and financial institutions have massive amounts of data and information to process. Digital transformation in banking and financial services used to only be the domain of the largest companies in the space. Increasingly midsized and small business in this sector are using MSPs or managed service providers to unlock the benefits of digital transformation in banking and financial services.
In this article we highlight the importance of digital transformation in banking, the benefits of digital transformation for banking and finance, and challenges facing banking and financial institutions.
What Roles Do Financial Institutions Fill?
Banking and financial institutions do many things for their customers. Their services include allowing customers to deposit funds and make payments to other parties (for example mortgages and credit card payments). They also provide credit and liquidity to customers including mortgages again, car loans, business loans, and more. They also provide customers with the ability to invest funds for both long and short periods of time (brokerages and retirement funds). Finally, they allow customers to transfer and share financial risks, as is the case with insurance companies and brokers. All of these activities involve multiple steps and rules-based processes. Digital transformation in banking and financial services can automate and streamline many of these.
What are the Current Challenges for Financial Institutions?
Like most sectors of our modern economy there are plenty of challenges to address. Our financial clients come to us with concerns about cybersecurity and data breaches. They also need to prioritize staying competitive and keeping up with ever increasing customers’ demands. From a technical perspective we help clients migrate from legacy software tools that are holding them back and to update outdated mobile experiences for their customers. Compliance issues are also a concern for our customers in this space and digital transformation and automation can really help in this regard. Software bots are always on and can always be working so there is reliability in the collection of data needed for compliance as well as processes that must be executed. Finally, competition can be intense these days and there are new offers coming from every direction. Technology can be used to help companies be more efficient and cost effective.
Importance of Digital Transformation in Banking
Digital transformation is important for financial institutions because it can help them address so many of the challenges they face. From ensuring compliance to helping with efficiency and margins it can be a real game changer. Digital transformation can also address important concerns like a shortage of labor. They can also make customer interactions quicker and more enjoyable. Consumers these days do not mind a piece of software helping them, as long as it works well and is additive to their experience.
Three Pillars of Digital Transformation in Banking
There are three main pillars of digital transformation in banking and financial services. These include RPA or robotic process automation, Conversational AI, and Cognitive AI. RPA is what is behind software bots. RPA is one of the fastest growing segments of business software and helps companies use a bot to perform tasks humans would have had to do otherwise. Bots are typically configured to do routine and mundane tasks that are rules based and lend themselves to automation. Software bots can read a computer screen by scraping it and then use applications like humans would up to 20 times faster and with near zero errors. They can copy and paste information and move a mouse around just like us. Conversational AI is a piece of software that lets humans communicate verbally and by chat with machines, or more appropriately other software applications. Cognitive AI are tools like OCR (optical character recognition) software that help documents be processed in large quantity. Cognitive AI learns as it gains more experience. These three pillars are vital for digital transformation in banking and financial services.
Managed Services for Financial Institutions Digital Transformation
We mentioned in the beginning that large companies like the Fortune 1000 have long recognized the importance of digital transformation in banking and financial services and have leveraged it. Increasingly, mid-sized firms and small businesses in the space are taking advantage of automation and AI by working with MSPs or managed service providers. Valenta is an MSP for automation and digital transformation. Companies like us offer services by the process and on a month-to-month basis. This approach can make it super easy to get going and get this technology into a business. Please feel free to reach out to our Managing Partners at any time to discuss RPA, Conversational AI, Cognitive AI, and our digital transformation services.