Over the past decades, there has been lots of discussion of digital and open banking, neobank, banking-as-a-service, banking platforms, FinTechs, etc. However, as we venture into the post-COVID-19 world, customers are now bracing the “new normal”. Their behaviours evolved as a result of digitisation and digital transformation, and digital banking has come into play to elevate their banking experience.
Malaysia has jumped into the fray of awarding digital banking licenses, and as of February 2021, it was reported that 40 parties have registered their interest to apply for the licenses with Bank Negara Malaysia (BNM). According to BNM, the licenses would uplift the well-being of Malaysians and businesses, while fostering sustainable growth with the application of technology. The breakthrough that we all anticipate is the bridge between the unserved and underserved segments and access to suitable financial solutions.
According to PwC, a “digital bank” is defined as a bank that primarily delivers banking services through the internet or other forms of electronic channels without the presence of physical branches. Digital banking offers convenience for both banks and their customers. A previously published piece on “digital banking key features and what it would mean for APAC” will offer you a deeper understanding of digital banking and its key features.
With the upcoming of digital banks and even digitisation of established banks, the competition is fierce. Banks would need to come out with a winning digital banking strategy to stay ahead in the game. To do so, one will need to demonstrate a mix of business strategy, innovation, new technologies, data management, detailed customer journey understanding, and appropriate risks and control frameworks.
1. Create a customer-centric mindset
Due to COVID-19, customers, even the unserved and underserved segments are being empowered by digital technologies like never before. This has transformed their relationships with banks and their use of financial products and services. Customer behaviours have evolved with a higher inclination towards digital banking services. For example, customers can now perform banking transactions such as transfer of money, payments of bills, etc, on-the-go, saving both time and hassle.
Digital banks need to engage with their customers differently. They need to put customers at the heart of their offerings. One way is to integrate personalisation and positive experiences so that an emotional connection is formed, making people feel heard, understood, and cared about. Hence, being an integral part of the daily lives from making daily transactions to booking flights and hotels to stay relevant and wanted by customers.
“What the COVID-19 crisis did was make consumers increasingly aware of the digital solution providers that were empathetic to their need for simplicity and transparency. No longer will financial services firms be compared to other banks and credit unions. Instead, they will be compared to those companies that have removed friction and made life easier.” – Jim Marous, Co-Publisher of The Financial Brand, Owner/CEO of the Digital Banking Report, and host of the Banking Transformed podcast.
Creating and integrating a customer-oriented mindset and culture at every level of the company is becoming increasingly important in this era. Adapting the customer-first mindset in all operational and strategic processes will ensure your financial solutions to be customer-centric. Empowering such a mindset requires the ability to adapt quickly and remove obsolete practices.
As an established bank, juggling to retain existing customers by maximising value from your “usual delivery” channels, in addition to trying to grab a share of the unbanked or underserved as much and as fast as you can via the digital route can be challenging. However, shifting your product-centric approach towards a more customer-centric approach might do the trick. For example, instead of using a silo-approach to sell your products, why not integrate all your solutions to create a seamless experience for customers? This will bridge the experience gaps and improve customer retention in the face of new competition. With a customer obsession culture, grow your digital fitness, and impact customer acquisition and retention.
2. Place innovation at the heart of all strategies
Innovation is the heart of everything digital. It is found that the higher the level of innovation maturity, the higher the innovative capabilities of the organisation to scale. Hence, to be sustainable, digital banks need to be innovative and agile even in making business decisions or creating your digital strategy.
Of course, it is easier said than done. Being innovative requires courage to constantly rethink how things can be done, even to challenge the norm. This requires the entire organisation to be constantly kept on its toes towards change.
Change is constant and uncomfortable. Hence, being able to embrace change whilst injecting innovative and creative ideas when rethinking your business model or leveraging advanced technologies, or understanding the new demands of your customers will eventually help you to scale in the long-run. However, all things said, innovation needs to start at the top. Many organisations have increased their efforts to build a collaborative work environment that cultivates innovation and creativity. Unfortunately, many look at innovation through a risk-averse mindset. Innovation itself comes with a certain amount of risk. Having a risk-aversion mindset can come in the way of lucrative opportunities and forming the right innovation strategies. For example, making only incremental improvements rather than the level of innovation needed to generate a return of investments (ROI).
As an established bank, if you want to keep up with the new and upcoming innovations and fintechs, placing innovation at the heart of all your strategies can create long-lasting advantage and produce dramatic shifts in a competitive position for you.
3. Leverage on the power of data analytics
Leverage the data you already have to guide decisions about which digital banking solutions will provide the most value to your customers. Then, customise the digital experience to build deeper relationships with your customers.
Future technologies such as artificial intelligence, big data, and machine learning have the power to take your customer’s digital journey to a brand new level. One way is by analysing customer behaviour trends over the past six months. From it, you can gain a fresh understanding of emerging habits and anticipate solutions by creating the right recommendations at the right time. For instance, target customers who could benefit from a loan refinance or measure an individual’s creditworthiness. However, these technologies are not a means to an end. It still boils down to actual people behind modern technology to deliver human-like intelligence across all channels which will determine the success of the outcome. Only humans can create genuine empathy and emotional connection.
People will forget what you say or do, but they will never forget how you make them feel. Leverage on the power of data analytics, become a proactive problem-solver rather than just a product supplier, you can make your customer’s digital journey more personal, and emotionally-engaged, with the human touch.
4. Look for opportunities to collaborate and partner to develop a fully digital ecosystem
It may be time to look beyond the four walls of your organisation for opportunities to collaborate and partner with an ecosystem of industry partners and FinTech providers. According to Boston Consulting Group research, it shows that 83% of digital ecosystems involve partners from more than three industries and 53% from more than five.
Partnering with other organisations is essential to develop ecosystems that can attract customers and deliver end-to-end customer journeys. It puts you in a position to focus on driving business value by eliminating frustrations with outdated, legacy systems. Hence, opening up to more customer bases, better technologies, and innovations to serve the bankable customers. This may even help you gain more insights into the unserved and underserved customers by leveraging on your partners’ experiences.
It is evident that digital ecosystems drive value by creating new sources of revenue, lower costs through improved business processes, and increase the speed of technology adoption. Just look at how China is moving ahead in the digital transformation game. Baidu, Alibaba, and Tencent, the three aggressive, giant internet companies are touching every aspect of their customers’ lives through their multifaceted and multi-industry digital ecosystems.
However, there seem to be some setbacks that put many banks behind the advancement of technology. Partnerships and collaborations may just be one of the options to resolve these setbacks. But remember, selecting and managing the right mix of collaboration is critical.
5. Ensure key regulatory compliance in establishing a digital bank
Opportunities to design and deploy new technologies to support your digital services that will revolutionise the industry can be very exciting. However, you should get it right from the start by making sure that the development of new technologies adheres to regulatory requirements. In order to do so, establishing a strong assessment and control framework will help you build a sustainable and robust business plan in line with prevailing regulations.
You see, digital banking brings out a new spectrum of risks. Banks need to manage and anticipate risks. It is time for the management to deliver representative governance and risk frameworks. In doing so, you can identify and mitigate potential threats. This will further help you develop new ways of working to deliver more agile and efficient risk and compliance frameworks equipped with the new technologies.
Many countries are changing their regulatory structures to adapt to the “new normal”. Such changes are accelerating the transformation and placing some of the power back into the customers’ hands.
Stay ahead in the game!
A well-executed digital banking strategy will raise financial awareness and literacy, boosting sustainable economic growth to various sectors and segments in Malaysia. At JurisTech, we want to partner with you to increase financial inclusion in Malaysia.
We want to help you evolve with the demands of customers by providing an engaging digital experience that lowers support costs and drives more revenue.
- Enable client onboarding quickly through our digital onboarding platform, Juris Access
- Automate your processes and decision making with our AI engine, Juris Mindcraft
- Ensure processes achieve compliance by design
- Create a safe and transparent environment for you
As a digital enabler, we provide you with the essential engine and backend technology that will aid you in your growth and succession in your digital banking journey. Requoting our CEO, See Wai Hun from a webinar focusing on digital banking – We ensure that all business is taken care of so our clients can focus on theirs.
Let us set you up to win.
JurisTech (Juris Technologies) is a leading Malaysian-based fintech company, specialising in enterprise-class software solutions for banks, financial institutions, and telecommunications companies in Malaysia, Southeast Asia, and beyond.
To explore more on our product suite, check out our digital banking solutions that cover everything from digital engagement, to credit management, to artificial intelligence.