• Data Science
  • 6 min read

How Digital Transformation Is Shaping the Banking Sector

why does the banking sector need digital transformation?
The COVID-19 has not just made people health conscious but has shifted them towards the remote working environment as well. Whether we talk about shopping or banking and financial services, people out there prefer digital transactions for that with minimal human interaction. The rise of digitization has enhanced the traditional banking norms. Even the stats show that in 2020, the Far East and China already accounted for over 800 million active online banking users which reached crossed 844 million in 2021. This figure is expected to reach nearly one billion by 2024.

Importance of Digital Transformation in the Banking sector 

Digital transformation in the banking sector has enhanced the banking experience for employees and users as well. Banking sectors can provide customized customer-centric services that can enhance users banking experience and reduce the tedious working process for bank employees. Leveraging digital transformation in the banking sector is a win-win situation for both. Integration of the banking process with today's technology can provide a hassle-free and pleasing customer experience. It can also provide robust growth to the banking service provider. Rather than being important, digital transformation is being necessary for the banking sector.

Why Does The Banking Sector Need Digital Transformation?

Individuals and communities trust the banks that change their working structure with today's trends. As no one likes to visit the banking branches often for simple tasks. Even for bank branches providing video tutorials rather than in-person guidance for tedious tasks such as opening a bank account process, wealth management guidance or even resolving complex problems diminish the work burden for the employees. AI embed chatbots can solve customer queries. Leveraging the blockchain concept can provide a secure net banking experience to the customer. Apart from that, there are so many future technologies available that can transform the banking experience for the customers.
 

Future of Digital Transformation in The Banking Sector

Every action has an equal and opposite reaction. Though the covid-19 pandemic has reflected the negative impact on the world, it has also transformed the world digitally way earlier than one can ever imagine. Future technologies such as AI, ML, Blockchain, and IoT have come into existence way before the prediction. Every industry out there is taking advantage of these future technologies to enhance its services. These technologies are shaping the future of Digital Transformation in the banking sector as well as bring more value.

Artificial Intelligence

The banking industry can leverage the AI service for online assistance as chatbots. AI embed chatbots can solve customer queries without any human interference. Traditional banking environments need specific working hours for customer interaction. On the other hand, users can drop and solve their queries whenever they want with AI embed chatbots. The banking sector can utilize Artificial intelligence for data management and fraud detection. It can track and analyze customer data to provide a secure and authenticated banking environment. AI in the banking sector can identify unusual transaction patterns to prevent money laundering.

Blockchain

The blockchain concept is helping banking sectors to provide more secure and accurate banking transactions. Implementation of the blockchain concept can diminish the chances of banking fraud to almost zero. Integration of blockchain to the banking sector will provide transparent banking services. Blockchain concepts in banking sectors can enhance customer reliability without any third-party application or software integration. The blockchain concept in banks allows them to go for a decentralized approach with cloud technologies that can provide more data and fund security.

Internet Of Things

IoT (Internet Of Things) can enhance the banking sector services with real-time analysis. It can help banks to provide more customer-centric personalized banking services. IoT is not just a service, it's a whole concept. Leveraging the IoT concepts are helpful with risk management in the banking industry that boosts contactless transactions. Biometric sensors, fingerprint sensors, face id and so on can shape the future of the banking industry differently.
 
No matter what we say, the future of the banking industry is way more secure than it seems. These technologies can bring innovation and more opportunities for the whole banking industry. Let's see the advantages and disadvantages digital transformation can bring to the banking industry.
 

Advantages And Disadvantages Of Digital Transformation In Banking

The smart strategy and the advancement of digital transformation are shaping the banking industry differently bringing countless advantages such as:
  • Bank on device

Net banking and mobile banking has allowed users to manage and track their bank account anytime they want with just an internet connection on the device. The banking transaction has been even easier with mobile apps and UPI transactions. Apart from that, you can drop an email from your registered email address to the bank to update your personal information.
  • Advanced Banking Service

Do you have no time to visit the bank during banking hours? No problem, you can access online banking services anytime you want, even on weekends. You don't have to wait in queues or wait for the banking employee to get your things done. The digital transformation has automated and reduced the tedious tasks. that used to waste such an amount of employee time.
  • Service Automation

Traditional banking operations used to demand a couple of hours even for the smallest task. The digital transformation has changed that. You can now get done with the basic tasks in seconds no matter where you are. 
  • Secure and Effortless Transaction

The mobile banking application, UPI transaction has transformed the traditional banking transaction process. It allows users to pay the bills, accept and send payrolls easily without demanding any additional fees no matter how small the amount could be.
  • Simple Management

Users and even banking employees can manage their bank accounts easily. Users can add and update their information easily though it requires a bit more information than the traditional process. But it enhances the security. It is easier to manage compared to the traditional banking process.
 
As every coin has two sides, the same goes for digital transformation. No matter how amazing the advantages are, some issues of digital transformation need to be addressed.
 

Disadvantages of Digital Transformation

  • Security Concerns

Most of the industries out there have one concern in common and that is cyber security. The banking sector is no exception. The most secured software can not completely secure all the data and information from frauds, scammers and hackers.
ost of the industries.
  • Lack of Automation

We have accepted digital transformation for most of the banking services but there are some of the services that need to follow the traditional banking process that requires the presence of banking branches.
  • Complex Transactions

Not all bank branches allow digital international transactions. That left you with two options: either you can change the bank or require you to visit the physical bank branch. Some of the banking transactions demand your physical presence at the bank branch.

Conclusion

The disadvantage of digital transformation is not that severe, and it's just a matter of time that the experts out there will solve them. The digital transformation in the banking industry is going to advance with time. If you still have not thought about secure digital transformation, it's high time you should. HData Systems experts can help you with every concern and requirement of yours, reach out to us now.

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Harnil Oza is a CEO of HData Systems - Data Science Company & Hyperlink InfoSystem a top mobile app development company based in USA & India having a team of best app developers who deliver best mobile solutions mainly on Android and iOS platform and also listed as one of the top app development companies by leading research platform.

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