{"id":32188,"date":"2021-04-21T12:06:55","date_gmt":"2021-04-21T11:06:55","guid":{"rendered":"https:\/\/digileaders.com\/?p=32188"},"modified":"2021-04-21T20:09:22","modified_gmt":"2021-04-21T19:09:22","slug":"to-digitise-or-to-digitalise","status":"publish","type":"post","link":"https:\/\/digileaders.com\/to-digitise-or-to-digitalise\/","title":{"rendered":"To Digitise or To Digitalise?"},"content":{"rendered":"
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To digitise or to digitalise? That\u2019s the big question for 2021 and beyond.<\/h3>\n<\/div>\n
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5 key considerations for retail banks as they transform.<\/p>\n

Retail banking is in the throes of the most significant transformation since its creation in the 17th century. Technology is the main driving force behind the change, influencing consumer behaviours and expectations, as well as shaping a new regulatory agenda.<\/p>\n

Technology is enabling the most sophisticated use of data ever seen, automating processes, replacing human capital and dramatically enhancing speed and customer experience. The digital revolution challenges the core of traditional banking models and demands all incumbent banks reconsider their strategies to ensure a sustainable future.<\/p>\n

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How will market forces influence the future of retail banking?<\/h3>\n

Consumers will be at the heart of the transformation in retail banking, resulting in a polarisation of the current market into platforms versus non-platforms. Competition will continue to intensify. We see the biggest threat to incumbent banks as the emergence of the platform business model. If incumbents are unable to digitalise, we expect their future growth to be under pressure.<\/p>\n

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What is the difference between Digitisation and Digitalisation?<\/h3>\n

To digitise<\/strong><\/p>\n

Taking an existing process and enabling some or all of it to be completed online. For example, instead of a document being sent by post, it\u2019s emailed to the recipient.<\/p>\n

To digitalise<\/strong><\/p>\n

A complete rethink of all processes. Starting again to ensure it\u2019s built digitally native, with the customer at its centre. For example, instead of a request for a change to an account being made by emailing a customer service address, the customer can make that change themselves on a customer portal.<\/p>\n

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How can retail banks prosper?<\/h3>\n

Following a decade of historically low interest rates and in a post-pandemic world where rate increases will be few and far between, the retail banking business model is under threat. Net interest income continues to be suppressed, requiring banks to deliver major transformation in order to reduce the cost to income ratio and enhance return on equity. Arguably of greater concern is the imminent threat to the traditional banking model from the digital revolution.<\/p>\n

Most traditional organisations assume their journey is complete when they\u2019ve replaced legacy and manual paper-based processes with digital functionality.<\/p>\n

However, that is only \u2018digitisation\u2019 and not true \u2018digitalisation\u2019. Digitalisation involves an outside in approach as well as an inside out approach. Only then can lenders and retail banks achieve straight through processing for smooth and speedy customer journeys.<\/p>\n

The bank should identify the customer\/user journeys involved and develop responsive user interfaces that deliver superior omni-channel customer experiences.<\/p>\n

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Why banks need to evolve<\/h3>\n

Sustainability and survival requires a rethink of the core business model and an even greater wave of transformation to reshape the business accordingly. Whilst digitising legacy processes will help with the short-term agenda, it will not be enough to secure long-term success. To thrive in the future, banks will require a shift in mindset and focus towards digitalisation.<\/p>\n

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Retail banks need to consider these five issues when they plan out their transformation:<\/h3>\n