Leveraging Digital Transformation Efforts to Improve Banking and Financial Services

When talking about an industry with digital disruptions, banking, and financial services are at the top. It is expected that if banks continue operating on the current models, they are at a growing risk of failure. According to David Furlonger, a distinguished analyst at Gartner "digital transformation is a myth as institutional mindsets, processes and structures stand firm". Moreover, he also stated that "Established financial services providers will have to move faster on digital platforms or finding niche services on other platforms". 

By 2030, nearly all traditional banks will be closed down, due to the growing digital platforms, according to research by Gartner. The future of the financial services industry is digital requiring few physical assets or to maintain their presence. It makes the industry prone to disruption by digital competitors. This is why a banking software testing company designs strategies that can keep up with this technological transformation. 

Let’s see how banks and financial services providers are leveraging digital transformation efforts to improve their services:

In June 2012, a technical error in software update caused a huge IT failure that affected more than 6.5 million customers in the UK. Financial Conduct Authority issued 42 million pounds for this failure.  Royal Bank of Scotland Group is a financial institute that claims to be following the digital trends and following the latest trends that are expected to grow. 

The chief administrative officer at RBS Group, Simon McNamara joined the bank in September 2013 and he was expected to fix the issues prevailing in the bank’s IT systems. It was expected that some new technological advancements will also be introduced without much disruption to banking services. Ever since, the bank has leveraged artificial intelligence (AI), chatbots and big data which has taken-back the financial industry. They are one of the top-notch financial services providers to set a benchmark in taking a proactive approach to digital transformation efforts. 

According to Gartner, only 20% of traditional banks will exist in the market, and only three types will flourish:

Fintechs - Individual companies or subsidies will provide traditional banking services, they will participate in digital platforms, but will not introduce them in their business or own them. Only 15% of traditional banks will convert to fin-techs.

Power-law firms - Financial companies that own a digital platform will use its low-cost infrastructure and customer information to create new services, only 5% of these institutions are capable of becoming power-law firms.

Long-tail firms - A few amongst the traditional banks will act as service brokers with their digital platforms. This works for those institutions that cannot leverage digital efforts, and 80% of traditional banks can become long-tail firms. 

Conclusion 

For improved and successful digital transformation efforts, business invests in software testing services, so that their apps can be bug-free and ensure high-quality performance to its users. To prove the above speculations wrong, banks and financial service providers are investing more time, effort and money in taking the right approach to open new doors and adapt to technological changes.