Developments during the past two years have reshaped our expectations of normality forever, as we adapted to new patterns and ways of living and working. One such change that is irrefutable is our reliance on digital connectivity and infrastructure for all aspects of our lives both at home and work.

For some sectors the pandemic accelerated digital transformation. The banking industry was not left behind as emerging technologies helped to sharpen resiliency, ensure continuity and enhance customer experiences in a short span of time. Customers responded positively and adopted new digital services, albeit in some instances there was no other choice as brick-and-mortar facilities and contact centres made way for the new normal and an expanding digital-first generation.

An agile, data-driven future

The role of banks is shifting from taking deposits and lending money to providing embedded services as organizations embrace Industry 4.0. Banks are integrating new technologies, Internet of Things (IoT), cloud computing, analytics, AI and machine learning for intelligent data-driven operations – as they work on being both digitally available as well as being digitally visible.  In fact, many of the banks we know and trust are turning to the cloud  to deliver the fast, personalized customer experiences that are  at  the  heart  of their new digital  first strategies.

The following three factors will play a key role in the upward trend shaping the further development of digital services:

First, is increased digital awareness and comfort amongst customers. Some customers of different demographics downloaded banking mobile apps for the first time during the pandemic. They overcame a big hurdle and enjoyed the convenience and speed of solving simple enquiries. Moving forward, analog ways of working will be too slow for customers in most of their interactions with banks.

Second, is the existential necessity of delivering operational excellence. Banks will need to continue to optimise and streamline people, processes, places and technologies, and focus all resources on core services and concrete objectives and outcomes. Until interest rates and revenues start to rise again, banks will continue to automate and redesign processes.

And finally, regulatory and compliance requirements will continue to rise across the board. With regulations on the rise, so too are compliance challenges. According to the IBM Transformation Index: State of Cloud report 53% of global technology decision makers believe that ensuring compliance in the cloud is currently too difficult and nearly one-third cite regulatory compliance issues as a key barrier for integrating workloads across private and public IT environments.

In financial services, more than a quarter of respondents agreed that meeting industry requirements is holding them back from fully achieving their cloud objectives. As many regulators urge organizations like financial institutions to use  multiple  clouds  to mitigate systemic risk, a holistic view across their hybrid cloud environment can help companies demonstrate  their  compliance  faster-freeing  up  time  and  resources  to  drive the digital innovation today’s consumers demand.

Rising expectations for personalised experiences

Banking customers expect exceptional, seamless omnichannel experiences and innovative products at value. To create a lasting advantage and retain trust, retail banks need to gain insight into customers’ current and future needs and how to meet them.

“As consumers’ preferences for digital and mobile solutions continue to grow in South Africa, banks and financial markets must find ways to transform customer experiences, modernize their business operating models, data, and applications, and make significant investments in emerging technologies to free up valuable human and technical resources. AI and hybrid cloud are the two most essential capabilities to effect change across the financial services industry to propel traditional financial institutions to becoming ecosystem orchestrators in an age of digital disruption and the platformification of everything,” said Ria Pinto, General Manager & Technology Leader, IBM South Africa.

The push for open finance could facilitate these demands using application programming interfaces (APIs)—the connections that enable applications and systems interaction to build new offerings. These APIs allow developers to create new applications that use capabilities from a much broader ecosystem of service providers, enabling banks to innovate with more agility and speed.

“As a modern app-driven bank, built with first principles offering world-first functionality around security, usability and transparency was fundamental to the success of Bank Zero. As customer experience is a core value proposition, our IT infrastructure must be scalable, secure and efficient whilst ensuring compliance. Our partnership with IBM and the use of solutions such as IBM LinuxONE and Open-Source software has contributed significantly to our internal efficiency putting us at the frontier of banking,” says Jay Prag, Chief Technology Officer, Bank Zero.

Focus on sustainable banking supply chains

Dramatic disruptions and the increasing importance of macroeconomics and sustainability factors to supply chains have thrust Banking and Finance Chief Supply Chain Officers (CSCOs) into the strategic spotlight. Those establishing data-driven workflows, insights, and actions are positioned to deliver compelling competitive advantage

“To effectively tackle unprecedented supply chain disruptions, Banking and Finance, Chief Supply Chain Officers, CSCOs, must increase investments in automation, AI and data-driven workflows, ecosystems and sustainability. According to a recent IBM Institute of Business Value Study, 47% Banking & Financial Markets CSCOs are expecting sustainability initiatives to substantially change their supply chain models.” shares Saad Toma, General Manager for IBM Middle East and Africa.

A six-point plan for success

As banks mature in their digital and organisational capabilities, the following plan can help them transition into a technology-enabled platform business:

1. Centre everything around customers. Use data to understand them and create relevant offerings, experiences, and interactions. For the selected segment, ask how essential banking services can be simplified, automated, embedded and even made invisible. Start with a smaller number of use cases and learn from them.
2. Adjust internal metrics to measure what matters in operating a technology platform business. For example, trends in the number of defects per X lines of code, developer productivity improvements, the speed of provisioning environments, or releases and digital customer interactions.
3. Explore forming commercial relationships with external partners that are willing to share investments and rewards.
4. Technology and Architecture. This presents the biggest risk and opportunity for banks as systems get more complex and interconnected. Using emerging and exponential technologies can help banks simplify and personalise customer interactions. Working with vendors that have security and controls baked into their offerings can accelerate the building end-to-end solutions and services.
5. A transformational journey of this scale and magnitude requires new sets of hard and soft skills. Make attracting, developing, and retaining talent a top priority.

It is imperative that CSCOs focus on using analytics, AI and automation initiatives to build intelligent, resilient, and sustainable supply chains. Establishing data-driven workflows, insights, and actions are the need of the hour to truly deliver a compelling competitive advantage to the banking and finance industry.