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Digital transformation trends of banking sector

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BANKINGBANCHEAll types of businesses need some form of business-banking services and it is very important to choose a bank or a banking institution that offers a full range of services that can support your banking needs as your business grows.

Searching for and eventually choosing the right bank for your business is quite similar to selecting the right employee to hire. The selection must be based on factors that ensure that you find the right attributes and abilities that help you with your financial requirements; and of course, why not, reach your business goals.

Especially in today’s digital era, selecting a bank that is digitally savvy and forward looking in accordance with new digital trends and transformations could be vital and can help you and your business be more efficient and effective in managing transactions.

Digital banking has changed the landscape of banking very rapidly over the past few years. Digital technologies which were originally restricted to banking channels now also include the whole banking spectrum. Ranging from back-office operations to client-facing channels, digital banking is the way forward for various participants in the financial services sector.

The banking sector went through different stages of digital transformation. Initially there was a conversion to electronic operations which led to higher efficiency and automation, thereby making banking more transactional and technology-oriented. Banks gradually started to focus more on improving the customer experience, for instance, through the introduction of automated teller machines (ATMs), call centres and phone banking. 

The next step was largely triggered by SMAC technologies (social, mobile, analytics and cloud) which enabled financial institutions to shift to a more personalised approach. The present wave of digital transformation is being driven by newer technologies such as blockchain, Artificial Intelligence and API banking, all of which have the potential to change the landscape of banking as we know it. Such technologies continued to provide more personalisation and improved customer experience, while at the same time transforming banking operations. This has also led to a substantial reduction in the number of bank branches as clients shift to online services.

As banking products become more standardised, the major drivers of client loyalty changed, whereby clients are now more in search of ‘customer service’ as a crucial element when selecting their preferred service provider.

In order to remain attractive, banks need to focus on the next stage of customer experience to outshine their competition. Nowadays banks are competing with fintech start-ups as they deliver their services across multiple devices used by their clients.

Banks gradually started to use biometrics such as voice recognition and fingerprints for easier access to banking services through mobile phones. Banks have started to use predictive analytics, artificial intelligence and machine learning so as to give a more personalised touch to their service offering. Banks need to continuously invest in the latest technologies as customers are now using multiple devices simultaneously and are always in search for more convenience.

Another trend which is worthy of mention is the emergence of open banking. This enables financial institutions to share anonymised client data with third parties through a set of Application Programming Interfaces (APIs). This has led to increased competition in the market, particularly by driving innovation in the quality of services provided.

The push towards more digitalisation led to financial institutions having more access to data on their clients. This, coupled with the fact that clients now have access to banking services from multiple devices, has made the whole network more susceptible to security vulnerabilities. In addition to this, regulations such as the General Data Protection Regulation (GDPR) resulted in data security being one of the topmost priorities across all financial institutions.

An area which is facing noticeable disruption in traditional banks is the processing of payments and forex services, particularly with the introduction of digital money wallets and alternative payment channels (PSPs and EMIs). Clients are opting for services provided by such licensed financial institutions as they may be cheaper, faster to execute and more accessible.

Financial institutions are operating in an environment which is constantly changing: changes in client expectations, day-to-day processes, changes in technologies and operating models, among other factors. They have to face rapid interruptions which are mainly caused by non-traditional banks which are providing harsh competition. Financial institutions need to embrace the importance of digitalisation and treat it as a priority for the long-term survival of their business. They need to continue evolving to catch up with these changes and remain competitive.

As service providers in Malta, we are noticing that the financial services sector is accelerating its adoption of digital technology. Paying with cash and even (to a certain extent) the usage of withdrawals and deposits of cash via ATMs are all being seen less and less in the financial services industry.

The term ‘financial services’ is a very broad one that is used to describe various services within an industry that is heavily based on finance and financial transactions. Loads of entities contribute to such an industry and it is seen that consumers are moving much more towards systems that allow them to manage their finances digitally and remotely, allowing them to maximise their time.

Other ‘external’ factors such as the coronavirus pandemic has also led to an increase of digitised meetings and digitised monetary management trends. This, we note, has also led a majority of financial institutions to improve their remote services.

It is hence very important that as stakeholders within such an important industry in Malta’s economy, we continue developing our systems and offerings to remain up-to-speed with such trends and enable the end-consumer to remain efficient and effective while managing their personal funds and those of their businesses.

As a leading corporate services provider, CSB Group strives to remain abreast of current developments and emerging solutions in order to assist clients and efficiently guide them through the various banking services options available both in Malta and in other countries.

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ARTICLE WRITTEN BY TIMES OF MALTA

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