What does it mean for banks to activate a digital offering in 2020 and beyond?
What decision-makers need to be thinking to achieve digital transformation.
The term Digital Banking is becoming more and more common for banks in Bangladesh. However, none of them has been able to offer up a solution that can boast the services as such. Most banks who have a digital app are getting by with offering baseline services that the rest of the world has moved forward ten years back.
So what is it that banks have been doing wrong or is it just the banks who have been incapable of activating the platform service or is it also the vendors, service providers and most importantly the Central Bank regulations.
I have come across some of the brightest minds in the finance industry in my FinTech journey for the last eight years. I also had my fair share of interactions with people or professionals who clearly do not understand what a digital banking transformation is all about. Last, but not the least. I met a considerable number of fraudsters, so-called false prophets, who are looking to make a name for themselves and salvage money by becoming advisers to companies and institutes and preaching solutions that will only fill their pockets.
So what does a decision-maker do to make the right move for their bank(s)?
One has to consider what will encompass in the paradigm of their Digital Banking transformation. Is it just to provide transfer capabilities, being able to pay for some daily activities, utility bills, and so on? I am afraid if you are thinking about this as the primary offering, you are living in the last decade.
One has to start thinking of digital banking as a transformation platform. It is a platform focusing on the customer demands that can offer solutions based on that matrix alone, NOT based on what a vendor is trying to sell. These days it is vital to know that solutions can be made to order. Your expectations would have to be reasonable too. No solution will be deployable if the Central Bank does not allow it before a hefty round of intense negotiation.
As a decision-maker in a bank, you have access to one thing that is the most powerful of all, even more than the solution, that is, data relating to business intelligence. Your datasets will guide you through setting your goals, focus your bank on steering accordingly. Maybe, your bank has an excellent portfolio in a particular field. Perhaps you want to focus on that and further enhance and streamline the access to services by your customers there. Or, maybe you want to activate a new vertical in your portfolio. However, I would suggest that you should be focusing on specialising in your area of expertise. A certain degree of polarisation of services would mean you can mature your brand value and establish trust amongst your customers. You can then move on building on that trust and introduce more verticals to the platform. By now, it may sound like I am talking about a five-year plan to do the first step and then move on the next. Certainly not! Besides owning and operating a FinTech company, I also own and sit actively on the board of a bank. I have also been serving as an active board member in the Audit Committee of my bank for the last three years. I appreciate the balance of technology and the impact of achieving the target in a small window of opportunity. Technology moves fast and demands a nimble operation setup.
Your market segment has evolved. If you are an MD, AMD or DMD, you probably are a 'baby boomer' or 'GenX' age range citizen. Do not be mistaken by thinking that this category of people are the leaders and are going shape the world. The world is already shaped by the Millennials (GenY) as we speak. Just around the corner are the 'GenZ' who are born into technology. Their definition of a phone is something cordless and smart; anything else is irrelevant.
Millennials are incredibly creative and masters of their mind. They don't care how big your balance sheets are, how expensive your suit is. They only care if your offerings fit their purpose. If you make sense to them, they will be your biggest promoters for free. The minute you become complacent, you become irrelevant, and they will jump ship to others who have better offers.
I know you might be thinking, your corporate clients are an older bunch, so you are safe. Your Corporate clients have a good flavour of what modern banking is from their interactions with the rest of the contemporary world. More so, as Bangladesh has a higher concentration of family-owned businesses, they are also seeing, Millennials entering the workspaces, in many cases, they are decision-makers or have similar power or influence on their boards. So think carefully.
So, it is very important to set your goals around your market demographics. I hope that I have made my point a little more relevant to you by now. Kudos to you if you already have that mindset. I want you to know you are 60% ahead of the curve already. Pat yourself on the back, you have earned it. You are thinking in the right lines. Now, you have the right vision, you have decided you want to be in the banking business in the years to come.
Start by getting a lay of the land. What the fragmented services that others are offering? The wallets, why are they so successful? Your competition, what they were doing better than you. If you want to engage in those areas, you need to do it on your terms. I want you to know you are at the helm of one of a high impact seat. You do not want to be overzealous and jump in without weighing in your options carefully. Your decisions have a lot riding behind it. Sound investments will be needed, but when done smartly, you can achieve an equilibrium that will prove to be your best option. After all, your overheads are amongst the highest in the industry.
Pin your market penetrations around your strengths. You, as a bank, have already had access to robust infrastructure at your disposal. Find them and plan around them. Transformation demands to repurpose the current and realign for the future. Blending technology with that of your capable and efficient personnel ONLY is the key to achieve success. The rest will need to be rehabilitated or removed. I am sorry, but it is time that banking reinvents itself. I know that you have employees who learned banking by entering data into large physical ledger/GL registers. Rehabilitation or retirement is on the menu for you. You have to be the one to make these tough decisions if you are to stay in the competition. People can change but let us not bank on the idea too much. A lot of them will fail the new mandate. A large portion of your workforce has very little to no computer literacy, let alone digital awareness. You need to work on it, make a plan, hire specialists who can help you close the gap faster. Inject younger, diligent employees. Identify your high performers and bring them forward. You want people in your team who understand banking to drive it forward. That comes only with relevant experience.
Someone from FMCG or Wallet background will never truly appreciate the difficulties of dealing around the red tape of the Central bank and its regulations, at the level a banker does. The complexities of banking operations are appreciated the most by members of your fraternity. Other sector inputs are not entirely irrelevant but advised to dip into with high caution. In many cases, professionals from such industry will make a move resulting from failures in their existing field. (This opinion is entirely subjective.) My view on the movement of professionals into big banks recently, coupled with my interactions with them directly or indirectly suggest to support it. I do not mean to offend anyone. I only mean to highlight what is happening. Do your homework with a high level of due diligence before you take them on board.
In contrast, people with the right build will prove to be extremely helpful as they will bring in ideas from their experiences and help you achieve better success. The best path would be to engage them as advisors. Then you have more control over the direction of your boat.
Now I will sound very bias. In this area, work with FinTechs who provide solutions and are willing to share infrastructure with you. FinTech that make their living by analysing your pain points. Therefore they need to understand banking and banking operations. FinTechs are more receptive to changes you want to make. If not anything, they can offer focused consultations. Do not turn to so-called fake FinTechs who are brokers or dealers of technology. You want companies who build technology and have the capability of building you something out of nothing. After all, if you have made it so far into the article, you already realise I am talking about 'Tailor fit' solutions not 'One size fits all.'
Find a partner who can stand beside you and help you grow over in the long run with a considerable amount of small milestones that needs attaining on time. You deal with money; TIME IS OF THE ESSENCE for you more than anyone in the economy.
I will finish this issue of my series here with a fundamental SWOT analysis of the current market scenario in the digital space. In the next article "Step 2", I will dive more into different available models and the key pillars of service segregation needed to achieve a real digital transformation.