7 Ways Banks can Leverage Fintech

It came as an unexpected blow but a blow it surely was. Out of nowhere, technology start-ups, species of an unknown fintech world and even pure-play technology companies, arrived in the comfort zones of conventional banks and changed the customer’s perception and habits on how banking can potentially look like. Digital lending, APIs, bots, Open banks, e-KYC, Beacon-assisted banking, social-media banking and what not; have started weaning today’s customers away towards a completely-unheard-of paradigm in banking.

That does leave traditional players scratching their heads and existing processes as they wonder - What made everything change, so strongly and so suddenly? But the answer ironically lies deep within. Technology just made it easy for disruptors to address what was plaguing the banking space so far. Who says only fintech players can wield technology?

If the erstwhile bracket of banks can take a candid call and look at the many ways of tapping technology, they may not just weaken a competitor’s edge, but gain one of their own.

Here’s how:

1. Automate with Blockchain: Most processes and functions in banking are mired in islands and isolated flows, worsening the speed and comfort aspects for customer. Blockchains and digital forces can bring in a new power of automation where crippled bank functions can find a new strength and pace with distributed ledger technology.

2. Use Algorithms and AI to Enhance Customer Experience: Algorithms, AI and digital ingredients can change the banking space in a comprehensive and deep way. Customers can finally say goodbye to unpleasant, tardy and stretched interactions when inaccuracy, complexity, cost burdens and delays of internal processes can be attacked substantially through agile IT and fintech edge.

3. Repair your Processes with Tech: Technology of this age can do the much-awaited but much-delayed repair for processes – stop them from being opaque and empowering both the employees and customers with a new breath of convenience and nimble-footedness that comes with combining the power of technology with the DNA of Finance, aka, Fintech.

4. Use Agile Technologies: Agile technologies can crumble the old ways of furnishing IT, and finally the complexity and fragility of adding another-layer-and-then-another upon an existing stack can be sucked out. Organic, lithe, lean and fast systems can save IT teams and users from the unwieldy burdens of previous decade.

5. Use Open Interfaces for Seamless Technology Integration: Tomorrow’s IT and banking would not be hinged around internal technologies but around external technologies so bringing in a fresh seamlessness and openness as well as space for heterogeneity is going to be a no-brainer for banks. There is no room for the rigid and hard-coded IT pieces that made up yesterday’s banking. Anything that does not facilitate quick turnaround, straight-through processing and real-time solutions is already archaic.

6. Keep a Close Watch of Newer FinTech: Digital tools cannot just cater to customers’ new appetite for quick convenience but also shave unwieldy costs and bring up employee productivity like never before. When Mapa Research studied some live global bank accounts, and picked strong digital trends in an Insight Report, it hinted at areas like Streamlining App Strategy, Investing in Open API Technology, Removing Friction from the Onboarding Process and Personalizing Functionality, Products and Content among other things. That translates into two things simultaneously – less costs, with more revenue opportunities. Or less attrition, with a deeper engagement of customers. That’s what Fintech is translating into.

7. Reduce Paper: There is so much to be done when it comes to removing paper and accentuating engagement when a bank thinks of arresting people dropping out mid-way in clunky processes, and consequentially capturing lost business and missed profits. No matter what the technology is – a chat bot, a touch-screen wall instead of a concrete branch, a fast process enabled with biometric identification, a Beacon or an interactive teller machine – elimination of redundant resources, wiping away wet signatures, and doing away with paper is going to be the new status quo.

Here’s what the 2016 Confederation of Indian Industry (CII) report ‘Fintech: Redefining banking for customers’ also seconds – be prepared to see consumer banking, funds transfers and payments turning into the most disrupted sectors by 2020. As many as 75 per cent of financial institutions have started feeling the impact of FinTech players in making make them more consumer-centric.

Being consumer-centric was an add-on in the last decade but going forward it is going to be quintessential to every bank’s existence. Just like technology.

It is not just about embracing Fintech or fighting it, but about the ‘how’.

Other Interesting Reads:

Blockchain Use Cases in Banking and Finance

Blockchain for Banks: Benefits and Implications