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What are the benefits of a digital transformation in the finance industry? Mainly the fact that it enables organisations to automate more processes, improve data analytics, optimise their resources, cut costs and enhance customer experience. At the same time, the process comes with several challenges that banks and financial institutions need to overcome: legacy systems, untrained staff, lack of UX experience and high competition. In this article, we will look at both sides of the coin. We invite you to read on.
Table of Contents
- The Benefits of Digital Transformation in the Finance Industry
- The Challenges Related to Digital Transformation in Finance
- Conclusions
The Benefits of Digital Transformation in the Finance Industry
Let’s start with the advantages that come with digitisation in finance. After all, innovative technologies open new possibilities and can help you take your customer service, back office processes and security to the next level. What are the main benefits of such a shift?
Automation
The more digitised a financial organisation is, the easier it is to implement automation and improve productivity. The best way to see it is to look at several examples.
- Customer onboarding – By digitising customer onboarding and implementing eKYC solutions using AI and biometric technology, you don’t need your agents to verify every single document and ID of each new customer. This not only releases a lot of resources that could be spent on more value-adding tasks but also reduces onboarding abandonment rates and builds a positive customer experience since an automated procedure will be faster than the one carried out manually.
- Document processing – With digital databases and document processing technology, it is possible to eliminate the need to input data manually from unstructured documents. Instead of your employees, an AI-powered system will conduct this job, with humans only needed when data is illegible, or the system detects a potential error (for instance, a non-compliant clause in a document).
At Ailleron, we can help you manage your document flow. See our AI document processing services and discover how we can boost productivity, reduce operating costs and enhance decision-making in your organisation.
Improved Data Analytics
Switching to digital data analytics in banking has one major advantage – you may access all the relevant data almost instantly. When artificial intelligence is added to the mix, you can even analyse your data quickly and more effectively, which would not be possible without digitising the files and creating proper databases.
Naturally, to reap the full harvest of this particular benefit, you need to be well-prepared.
Firstly, you need to build a unified database into which you can integrate all the data from all your systems and platforms automatically (preferably in real-time).
Secondly, you need to cleanse and organise your data to eliminate the possibility of bias or flooding your system with irrelevant information.
Nevertheless, if you do this, your organisation will benefit from predictive, actionable insights made based on patterns spotted by AI that would not be observed by humans. In simple terms, you can make much more accurate, fully data-driven decisions.
Resource Optimisation
Digital transformation also means a better overview of all the processes in the finance industry. When combined with AI, again, this insight into your organisation may become a basis for changes, a set of improvements targeted at enhancing productivity, reducing the number of errors or simply improving the quality of the work carried out by your employees. How does it work?
By moving all the processes online and having them analysed by properly trained AI models, you will soon learn about the main bottlenecks in your organisation. This is naturally only half of the success – you still need to come up with solutions to them. Nevertheless, digitalisation will help discover issues, leading to better resource management in the long run.
Customer Experience
Finally, digital transformation leads to a much better customer experience in finance. How? You get access to numerous digital solutions that can help you deliver more positive, personalised customer experiences, such as:
- Intelligent product recommendations – Driven by AI, these help you personalise the offers you present your customers with, improving their experience and driving sales.
- Faster processes – Due to automation, procedures like onboarding become quicker, making them more convenient for the customer and hence improving their experience.
- Omnichannel and optichannel approach – With digitalisation, you can connect all the touchpoints through data integration, delivering the same experiences across all channels and letting your customers use whichever communication channel they prefer at a given point of their journey.
- Higher service quality – In segments like wealth management, you can increase the overall quality of your services by implementing technological solutions like an AI prompter that analyses potential investment opportunities and helps your wealth managers select the best ones for a particular client.
Do you want to build the best possible customer experience through digitalisation? Then, learn more about our digital process automation.
The Challenges Related to Digital Transformation in Finance
Having established the bright sides of a digital transformation in the finance industry, we must look from the other side – the challenges or possible obstacles that might hinder this shift. What are they, and how can they be overcome? Here are all the answers.
Legacy Systems
Revolutionary as the term digital transformation may seem, it’s not that there weren’t any IT solutions used in finance before it; on the contrary, most financial organisations already operate on some kind of software. However, it’s always outdated, which may cause problems when embracing Industry 4.0.
Incompatible data formats, complex infrastructure that cannot be translated into new systems, transitioning all the resources from legacy software to a new platform – all of these are challenges that banks and other financial organisations need to overcome. To do so, you need to work with the best experts, like us at Ailleron, but also have vast resources that you can spend since switching from legacy systems will never be easy and smooth.
Need help with digital transformation in your organisation? See our financial technology services!
Compliance and Security
The second potential danger lies in… compliance and data security. Unlike other businesses, organisations operating in finance are subject to high security risks and legislation that maintains how these risks should be managed. This is why you should not work with any software development house when building your new digital infrastructure; instead, you need to partner with experts in fintech, like us at Ailleron.
Digital Illiteracy
As humans, we fear the unknown, which is a natural instinct. However, a digital transformation plays the role of the unknown in finance. This is why your employees might be afraid of it. When this is combined with a lack of digital literacy (mainly due to the lack of digital solutions implemented in the past), this creates a major problem. After all, even the best systems won’t fulfil their role if people behind them don’t know how to use them.
This is why a crucial part of your finance transformation to the digital realm should be training and mentorship programmes. You need to explain to your employees why the transformation occurs, show them how they (and your customers) will benefit from it, and explain how to navigate this new setting. Otherwise, you won’t unlock the full potential of your digital solutions.
Lack of UX Experience
Do you remember the time you started working in finance? How did you feel? Did you know exactly what you were doing, or did you make mistakes due to the lack of experience? Probably the latter. This example is the perfect analogy for a digital transformation in finance.
Such a shift involves introducing numerous technologies that are completely new to you. Solutions that you cannot design to perfection – there are bound to be UX issues that you will be solving on the way. This is yet another challenge that you need to overcome, and the best way to do this is to, once again, partner with an experienced fintech development company.
Do you want to avoid beginner’s mistakes when designing your first digital platform or mobile banking app? We offer you the perfect solution: our UX design services for financial institutions.
High Competition
Digital transformation is a hot topic in finance, which means that an increasing number of organisations are pursuing it. This, on the other hand, makes it harder to build a UVP. What is more, many new players emerge in the process, offering, for instance, digital-only banking solutions.
How do you overcome this challenge? You need to carefully think through your strategy and find a way to stand out from the competition.
Conclusions
A digital transformation in the finance industry brings many new opportunities, but the road to it is bumpy. However, every obstacle can be overcome with the right tools and strategy, so do not let this discourage you – embrace the digital if you still haven’t done it!
You might also read: How to Adopt Artificial Intelligence in Your Business?
