The banking sector has become digital. What tools and solutions does it use?

The development of advanced technologies has a particular impact on the business sphere. Recently, the financial sector has been going through one of the most ambitious stages of evolution. First of all, this applies to banks. They are no longer the place where people come for money and become conduits of necessary financial services. 

Banks have new competitors. Among them are both promising fintech startups and ecosystems that unite finance. In such conditions, digital transformation becomes a necessary solution for those who want to strengthen their positions in the market. 

What is digital transformation in the banking sector?

Digital transformation in the banking sector is the use of modern equipment and software and the transition to management, communication, and corporate culture. Digitalization arises as a result of the development of information and communication technologies around the world. The economic sector was one of the first to be influenced by the active development of all industries. As a result of the economic crisis, the financial sector was looking for new ways to reduce costs while maintaining the quality of services provided to its customers. At the same time, the market for modern mobile technologies began to grow. The promotion of the concept of the Internet of Things and blockchain was developing. We can assume that this accelerated the process of digital transformation in the banking sector. 

The impact of digitalization on modern banks

The creation of a digital bank includes:

• optimization of processes;
• new organizational culture;
• flexible IT solutions;
• scalability;
• ability to maintain speed;
• bringing products to market;
• personalization of offers.

The tasks of digitalization are accumulated within the framework of a single banking platform. They meet the challenges of the new digital economy that has overtaken the banking sector. Banks are investing heavily in the development of the business model of the future digital bank. The transition from traditional to digital banks is one of the leading trends, which has been fixed in the programs of international discussions at economic forums and conferences. 

Today, existing digital banks offer most of their products and services in digital form. The infrastructure of such a bank is optimized for digital communications and is fully ready for a rapid change in technologies. The number of such banks is growing. It should be noted that recently there has been a progressive development of mobile and online banking. They do not have their own offices or ATMs. Online banks offer their users to conduct all operations online. Using a website, a mobile application, communicating via chat with an operator and rarely by phone, a consumer can issue a card, a loan, etc. Therefore, digital banks do not have an obvious need to open offices in different cities, pay for the supply and security of those offices, and contact customers directly. Therefore, flexibility in servicing is the key to the more rapid growth of the digital bank.

As a rule, they offer their clients a wide range of services through the development of software for banks. The banking sector provides: 

• free choice; 
• availability of services; 
• additional functions; 
• ease of use; 
• security of the basis of new digital solutions.

What are the key components of digital transformation for the banking sector?

Digital transformation involves the transition from traditional methods of work to completely new ones. They are built based on modern technological solutions. This process affects important aspects of the business. They include: 

• customer service; 
• organizational structure; 
• data integration; 
• user privacy; 
• logistics; 
• sales.

The components of digital transformation are divided into several categories:

• Reliability in customer relationships. A noticeable result of the transformation is improved customer service. In general, marketing communications and sales have become more simplistic with the introduction of digital technologies. Close interaction with customers helps build an effective marketing strategy and causes an improvement in relations with customers.
• The internal process of organizations. It is expected that changes in the company’s infrastructure will lead to the emergence of new processes. For example, the exchange of data by e-mail is not a new process. This is a modern way of performing everyday tasks. The bank receives several advantages. Such as speeding up communications with partners, increasing productivity, and eliminating paperwork. The introduction of network tools and knowledge-sharing tools virtualizes the workflow. And all this is due to a change in the data exchange model, that is, the digitalization of the workflow. 
• The management’s work process. The research of analysts shows that digital transformation fails in most cases. One of the main reasons is the fear of managing the upcoming changes. The effect of new trends depends on the willingness of the management team to rethink the business management processes. In particular, the customer experience. Following the digital transformation rules, companies have a clear idea of the tasks and ways to solve them. 

The main digital banking tools

Digital banking is not something new. However, it is still convenient for most segments to carry out banking operations through physical channels. Many banks offer various digital tools for processing bill payments or withdrawing cash from an ATM without using a card. 

Let’s look at a few tools that are used in the digital transformation of the bank for security: 

• Online Banking. Today, the bank’s clients are allowed to carry out financial transactions without leaving their homes. Online banking is a new stage of development that allows you to access and manage accounts 24 hours a day. Online banking can also be one of the priority tools for small businesses. Many banks already offer various services for businesses through online portals.
• Mobile applications. This also applies to the category of online banking. Now the development of mobile applications is an actual solution for banks.
• Smart ATMs. Due to the social distancing measures taken, many people try to avoid contact with areas with a high intensity of human trafficking. Smart ATMs allow you to receive cash at a supported ATM safely. With the mobile app, you can get cash without even taking out a card or entering a PIN code. Today, banks offer a variety of digital tools that are suitable for social distancing.
• Contactless Payments. Software development for banks provides an opportunity to pay for purchases using contactless NFC payment. They allow you to make safe purchases. Just touch your contactless card or mobile device to the terminal.

Software development for the bank is one of the most relevant solutions today

Banking software provides the infrastructure for creating and administering financial products. In addition, the banking software can store data about the owners, maintaining complete confidentiality. It also handles financial transaction processing and accounting. A competent UX design is responsible for the appearance of mobile banking. The developers of banking software emphasize the flexibility and customizability of the application following the individual customer experience and financial products. 

Functions and capabilities of Banking Software:

• Processing of invoices and transactions around the clock;
• User-friendly interface;
• Fast product workflow;
• Self-service;
• Processing online payments;
• The ability to pay utility bills;
• An opportunity for the bank to interact with customers;
• Tracking transaction history;
• Data storage;
• Complete confidentiality of the owner’s documents; 
• Account;
• Managing multi-currency funds;
• A well-coordinated process on financial instruments; 
• Support for a mobile application.

From the point of view of the business development department, digital transformation is not a reverse process. Standardization and automation of work processes take into account fundamental changes in employee behaviour. Digitalization cannot completely replace manual labour, but it can transform the model of corporate interactions and provide full effectiveness in the future. The development of the IT department comes to the fore. Because of the improvement of digital resources, automation and technical support of the software is becoming a priority.