Traditional banks and large enterprises face service gaps, needing to find innovative solutions to address consumer banking needs and provide personalised solutions. According to a consumer survey, close to 50 per cent of consumers want to receive online banking services from large enterprises and organisations. Additionally, they prefer the ease of access that digital banking solutions provide, despite expressing security concerns. 

Collaborating with neobanks and fintech solutions helps traditional financial institutions provide agile services and optimise their operations to boost efficiency. Traditional banks that recognise the importance of digital transformation will see the true worth of adopting digital banking, improving their financial returns along the way.

Progress with digital transformation is a must in 2021 

Traditional financial institutions struggle with consistent disruption and are faced with potential overspending due to the pressure applied by digital banking solutions. Traditional banks failing to prioritise digital banking in 2021 and beyond will undoubtedly lose their competitive advantage.

Digital banking provides traditional financial institutions and established enterprises with unprecedented opportunities. With digitisation in banking, institutions and enterprises introduced advanced technology, provide cloud support and optimisation for critical data, and top-level security measures including biometric technology and two-factor authentication. Banks and enterprises are separating themselves from process-driven interactions, transitioning towards digital channels. These channels are that have seamlessly integrated to satisfy operational requirements. Digital banking redesigns how they provide services, eliminates complexities and scales operations, reducing costs along the way.

The pandemic has vaulted digital transformation to the top of the objective list for many traditional banking institutions, forcing them to utilise their digital channels and improve their touchpoints. Proactive institutions and enterprises can reap the successes and advantages of digital banking, including ease of use and less reliance on legacy systems, while also improving their customer service methods.

Digital transformation improves personalisation 

As consumers seek more personalised, customisable banking solutions, traditional banks should invest in digital banking to boost their service quality. 

For one, banks can use the customer data they collect to streamline interactions with faster account opening processes and accelerate loan applications. Furthermore, digital banking platforms let customers seamlessly manage their finances through open and flexible means, regardless of their devices. Data analytics, meanwhile, are another measure that digital banking solutions use to optimise consumer experiences, understanding their needs to offer individualised financial products and services. Plus, digital banking solutions use modernised ATM technology that cross-sells financial products based on specific consumer preferences. 

Investing more in security through digital banking  

More robust security measures and improved self-service engagement are required to buffer security measures, protecting financial institutions against fraud and cyber criminal activity. People have expressed their concerns regarding their ability to trust traditional financial institutions and large enterprises with their money, with the trust equation shifting worldwide to neobanks and fintech solutions. For example, in markets like Europe, just under 10 per cent of respondents in a survey cited that they use neobanks as their primary financial service provider. Plus, with 63 neobanks being located across North America, there is increased momentum for digital banking solutions with consumers concerned about the tight regulations and government monitoring associated with security in large financial institutions. 

People want to have a banking solution they can entrust with their long-term financial wellbeing, and there is continued concern about how well traditional banks can safeguard their information. Digital banking solutions use blockchain technology to decentralise financial services, provide smart contracts and full KYC/AML compliance. Turnkey neobank solutions, for example, feature each of those elements while also using artificial intelligence to improve operational efficiency. 

Improving cost management 

Investing in digital banking solutions reduces costs for traditional institutions hoping to improve budget allocation and productivity. 

Increased digital transformation helps institutions eliminate unnecessary operational steps, create more value-add tasks and streamline operations, easing the burden on their staff. The increased reliance on automation eases the burden of cost management, cutting out manual processes as cloud technology houses all the necessary data that banks rely upon. 

Furthermore, the actionable insights derived from data analytics allow traditional banks and large enterprises to cut costs while improving decision-making. Investors in digital banking have clearer ideas of how to manage their operational costs and know what aspects of their services and overall business need optimising. 

The digital banking tools will help employees of traditional banks and large enterprises work smarter and be more efficient during their daily tasks.

Digital banking solutions, particularly white-label solutions,  let businesses launch various applications under their brand as quickly as possible using third-party licenses, modular microservices, and permissions. Such solutions are critical for traditional banking institutions to jolt their security measures and operate with the sort of efficiency that keeps them highly competitive in a concentrated financial marketplace.

Serge Beck, CEO and founder, Optherium Labs