Open Banking

Challenges and opportunities of the digital transformation of banking in 2019

14th January 2019

The digital transformation of banking constitutes one of the greatest advances in recent years. At an international level, the digitalization of all processes is unstoppable, including the application of state-of-the-art technologies and the implementation of software to optimize their operations.

The digital transformation of banking is, first and foremost, an obligatory step in the financial system. Other institutions such as entertainment, communications, and even sport have been able to adapt to the technological era. Banking should not be the exception.

This is why such essential alternatives as Open Banking have emerged. Its implementation, in which banks share their information with third parties, is of great help in the development of APIs that facilitate the lives of customers and also allow financial institutions to grow.

For this to happen, however, it is important to understand that there are challenges that must be met. The first is to accept that the digital transformation of banking is a system-wide process and not just a business alternative.

Now, this series of challenges and opportunities requires an explanation to understand how to deal with them by 2019, so let’s go!

Advances of digital transformation in the financial sector

All the advances in the digital transformation of banking point towards a single objective: the use of Information Technologies. This has resulted in the use of alternatives such as Open Source, FinTech, and even Blockchain. However, at the level of financial systems, Open Banking has a wide panorama, thanks to the use of APIs.

-This post might interest you! “APIs in the banking sector: What are they and what use they have?”-

This last aspect covers the competition of banks against banks to offer a better service, the simplification of the lifestyle of their customers, the attraction of new audiences, optimization of transactions, increase in income, expansion of the financial system and much more.

However, for this to happen, for the digital transformation of banking to take great strides in 2019, much effort is required. Its innumerable opportunities merit, on the one hand, adapting to technological advances, but on the other, educating customers so that they understand everything that happens and accept it.

Aspects such as customer journey or the use of data are ways of doing this.

Customer Journey in digital banking

One of the main challenges of banking is to make Costumer Journey completely digital.

This process, which is nothing more than the “journey” of customers to finalize their operations, is important.

Today, despite the existence of mechanisms to carry out transactions digitally, a large number of the public prefers to go to the bank. It is part of a custom that, far from making life easier, makes it more tedious.

“Part of the digital transformation of banking is taking on the challenge of changing this situation. It is not enough to create platforms to make payments; everything must be managed by technological mechanisms. With Open Banking, the financial system takes a step forward in this aspect.”

-Find out more: Pros & cons of Open Banking-

By creating ways for Costumer Journey to be digital, banks can save on costs. Plus, their employees will be on the lookout for other, more important tasks. In this way, it is possible to adapt to the processes that have long been implemented by platforms such as Amazon.

Use the power of data

Until now, the data held by banks have not been used in an adequate manner. As part of a digital transformation, this process must be included in their daily agenda. Its implementation generates many results.

When customer data is analyzed, banks can better understand their needs and tailor services to their needs. It is as if the institution were a step ahead.

On the other hand, data analysis also helps to prevent fraud, to learn which businesses are best suited, to develop loans or services, and even to personalize each customer’s loyalty mechanisms.

-Learn more about the digital transformation of the banking sector here-

Data mining is one of the aspects most used by companies of different types of services today, and its results have been excellent. It even works as a way of knowing the needs of audiences outside the company. This is how effective marketing strategies are developed.

This aspect requires a lot of attention and the use of the best technology. However, the benefits it generates multiple revenues and support the growth of any company.

Conclusion

Being prepared for the opportunities that arise with the digital transformation of banking is of paramount importance. To do this it is necessary to know Open Banking and its multiplicity of benefits for customers, entrepreneurs, and owners of financial institutions.

This is the reason why the application of the highest technologies and the development of programming languages and APIs that work properly should be considered. In this way, it will be possible to be successful to face all the changes that arise.

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