Reshaping Banking: The Global Digital Banking Radar 2023 

Transcript 

00:00:00 | Overview of the report results 

Pedro Leite and the host introduce the purpose of the webinar, which is to give an overview of ebankIT and Qorus’ joint report titled "Reshaping Banking: The Global Digital Banking Radar for 2023" with a few key insights. The hosts are joined by a group of speakers who share their expertise on the topic of digital reinvention, digital transformation, and innovation in banking.  

Roberto Ferrari introduces Qorus' digital intervention community, which is centered around sharing insights, knowledge, and know-how about digital transformation and innovation for short-term technology development and business transformation. 

 

00:05:00 

Roberto Ferrari discusses the creation of a global digital banking radar, which is a joint effort between Qorus, a financial community, and ebankIT. With the community comprising over 180 financial institutions from around the world, and 60 different countries, the radar aims to provide an outlook on the digital transformation of financial institutions and its broader impact.  

Renata Petrovich, the chairman of Qorus' Digital Reinvention Community, believes that collaboration is key to innovation and the radar will enable experts to learn from each other and see the changes across time. They note that, while massive investments have been made in digitization, banks incumbent must also focus on maintaining their market share. 

 

00:10:00 

Roberto Ferrari and Renata Petrovic discuss the evolving trends in the banking industry, including major investments in corporate innovation, digital transformation, and people processes over the last 7 years despite retention still being a challenge.  

However, there have also been challenges in the industry, such as rising energy crises, inflation, interest rates, geopolitical instability, and the bursting of bubbles in tech and fintech. Renata Petrovic emphasizes the need to rethink our approaches to corporate innovation and digital transformation and aim for sustainable business practices.  

Then Pedro Leite introduces the survey and its four pillars, which will help identify patterns and a path towards change for the industry.  

 

00:15:00  

Pedro Leite discusses the four pillars of their survey on the digital banking landscape. The first pillar is identifying the ripple effects of the pandemic on the digital banking landscape. The second pillar is embracing digitization and how financial institutions need to evaluate the maturity of their digital journey. The third pillar focuses on customer engagement in a digital environment and the need for personalization. The fourth and final pillar is digital reinvention, looking forward to innovation and trends in the digital banking landscape.  

The survey results highlight that ensuring remote work conditions has been the main structural change brought on by the pandemic, with 71% of banks responding that this was their key focus. 

 

00:20:00  

The pandemic forced many banking institutions to transition from paper-based processes to fully digital ones. This was a challenge for many institutions, especially with regard to designing and deploying new processes. However, a majority of institutions recognized that serving their customers purely through digital channels was necessary and invested in new technologies and talent to make this possible.  

The shift to digital also brought about the need for secure connections to exchange sensitive information without compromising the overall operation of the institution. This section also emphasizes the need for innovation and investment in digital banking to keep channels open and better serve customers. 

 

00:25:00  

The majority of financial institutions acknowledge that the pandemic has changed and altered their roadmap for digital transformation, with a focus on improving the functionality of digital apps, the ability to cross-sell and upsell digitally, and facilitating contactless payments. The current state of digital transformation for almost 40% of institutions is more than halfway completed. 

 

00:30:00  

The focus is on modernizing and simplifying the digitalization processes of banking by removing friction and optimizing the customer experience. The key approach is business transformation, which involves imprinting innovation approaches into teams, changing mindsets, and legitimizing the process.  

The report highlights mature banks are focused on expanding into new product areas. Surprisingly, mobile still appears as one of the top channels for interaction with customers, emphasizing the relevance of this channel in communication.  

There is also a correlation between the number of jumps that a live customer does with life assistant channels and the cost it has for the institution, highlighting the importance of making the digital ecosystem work in the long run.  

While the majority of institutions place themselves in the early adopters or pragmatics segment, a good 27% are innovators or other adopters, indicating a cultural change within institutions towards more agile mindsets. 

 

00:35:00  

The success factors of digital transformation are discussed with an emphasis on the importance of CEO sponsorship as a common denominator among institutions that have successfully implemented a digital approach.  

The report highlights a shift from laggards to early adopters and reveals that checking and deposit accounts are considered the most mature products among institutions. However, digital deployment and internal complexity remain a challenge, with legacy systems and the lack of talent being the main external blockers identified by institutions. 

Additionally, the report delves into the concept of "humanized digital banking" and identifies a need to make digital approaches more frictionless and human-centered. 

 

00:40:00  

The lack of budget for new initiatives and the complexity of multinational operations were identified as key challenges for digital transformation in larger institutions. External factors such as regulations and low user adoption were also deemed as blockers.  

To overcome these challenges, banks need to adopt key technologies such as data-driven personalization and real-time client analytics to drive customer satisfaction, loyalty, and aid in cross and upsell efforts. 

Having a solid online and mobile solution is crucial to mitigating costs and improving user adoption. Ultimately, personalization and real-time client analytics will be significant differentiators for institutions. 

 

00:45:00  

The findings from the "digital wind bench" section of the survey, look at where institutions should focus their efforts next. The survey found that personalization and the humanization of the customer experience are crucial for banks, as is the development of mobile super apps.  

The report also found that institutions are generally successful in their innovations, with over 50% of institutions evaluating themselves as successful. However, the bigger the institution, the more complex and longer it takes to turn something into a digital offering, with the main timeline being between six months and two years. Neo Banks' ability to deploy ideas into digital offerings is allegedly correlated to their overall internal complexity, but the speaker argues that it's more about differentiating features from products. 

 

00:50:00 

The survey results pertaining to where institutions see more innovation happening in the next five years are discussed. The top priority is the complete digitalization of the customer journey, which correlates with the feedback in the previous sections of the survey.  

The second priority identified by institutions is expanding their digital partner ecosystem, likely driven by the access to innovation that comes with quick plug-and-play experiences with partners. The flexibility that comes with partnering with other entities translates into a better overall customer experience, making it a key argument for institutions.  

Furthermore, security concerns are still prevalent, and the threat from big players like GAFA can't be ignored. Overall, these insights are positive for the future of digital banking and consolidate a pattern of institutions embracing an innovation mindset. 

 

00:55:00  

A survey on the impact of technology in the banking industry over a three-to-ten-year period reveals a pattern of waves, with the first wave focusing on cybersecurity, process automation, and digital payments.  

The second wave is all about applying artificial intelligence (AI) to enhance customer experience, optimize key aspects of institutions, and improve machine learning, especially with natural language processing models.  

The third wave focuses on cryptocurrencies and the metaverse, but there is still a lack of understanding around these topics, and the adoption rate from users is low.  

Institutions prioritize investment in customer experience, redesigning services in a digital-first approach, and cybersecurity to keep relationships and interactions safe.  

 

01:00:00 | Round Table 

In this second section of the webinar, the speakers discussed the disadvantages and advantages of the pandemic on the banking industry. The pandemic accelerated the much-needed attention and acceleration to digital transformation in the industry. Central banks started working on regulations for open banking, and cloud computing and even opened a regulatory sandbox to test new concepts. This transformation has become a fundamental aspect of businesses. ebankIT, as a company, provides a platform that balances product delivery with customization, allowing long and meaningful relationships with institutions, which has been successful for their FI Partners.  

 

01:05:00  

Khatija Iffath discusses how the pandemic accelerated the adoption of digital banking. With restricted movements and strict quarantine rules, people of all ages were forced to use more technology, accelerating digital adoption by five years. Banks had to increase transaction limits and load digital channels with services to encourage banking from home. This gave the banks insight into how their customers welcomed the technology adoption.  

Additionally, remote working became normal, which helped increase capacity both locally and globally. Despite the difficulties faced by the banking industry, the pandemic had some positive effects on it. Santiago de Larrea Teruel from Crèdit Andorrà has shared that in Andorra, where seven million tourists visited each year, the abrupt closure of the tourism industry forced the banking sector and company executives to adopt technology more quickly than they had originally planned. 

 

01:10:00  

They note that the pandemic forced many businesses to adapt to new needs, such as electronic payments and connecting with customers through video calls and instant messaging. They also highlight the importance of reorganizing and restructuring institutions to facilitate digital transformation, noting that it requires more than just technology but also involves people, talent, organization, structure, culture, and leadership. Despite different institutions having different roadmaps for digital adoption, the speakers stressed the need for early adoption and experimentation in order for businesses to thrive in the post-pandemic world. 

 

01:15:00 

Renata Petrovic from Bradesco explained how they reorganized their entire business in order to better address customer needs through an agile approach. The bank reorganized into business domains that were built around customer needs, with 80% of software development going into groupings called Villages that are made up of squads focused on developing products and services.  

The bank found that having small teams in-house working on requirements alongside another small team on the bank side was the most effective way to get a common understanding of customer needs and priorities, and having open APIs was key for success in digital transformation. As priorities shifted during the pandemic, the bank continued working on topics such as video chat and chatbot functionalities. 

 

01:20:00  

Khatija Iffath discusses the priorities for innovation investment at KIB and where they have felt the impact of their innovation efforts. She emphasizes the importance of technology and digital transformation but notes that it's crucial to understand where to implement these technologies to solve problems for customers and bring in revenue.  

Underserved segments such as SMEs and blue-collared workers present opportunities for innovation, and the speaker also suggests investing in human capital and improving efficiency. The speaker notes that while digital adoption in Kuwait has been high, physical branches are still crucial for customers' sense of security. As such, KIB is pushing for digital operations but also rebranding and redesigning physical branches to replicate the digital ecosystem. 

 

01:25:00 

Santiago de Larrea Teruel from Crèdit Androrrà emphasized the importance of internal digitization to provide new digital services, while also focusing on differentiation in payments, investments, and wealth. He also mentioned the significance of providing training and learning to customers in order to provide trust from both operational and knowledge points of view.  

Renata Petrovic from Bradesco believed that AI and blockchain would be the game-changing technologies in the banking industry, particularly in terms of using AI to personalize offers and get the most out of ecosystems and partnerships as well as implementing blockchain and distributed ledger technologies to change the infrastructure underneath the industry. 

 

01:30:00  

Renata Petrovic continues the discussion by assessing saying digital assets, decentralized finance, central bank digital currencies, and cloud technology will reshape the banking industry.  

She notes that their bank is investing in infrastructure and experimenting with new partners to prepare for the token economy. They also mention that their bank is starting to experiment with quantum computing, which they believe has the potential to solve many problems currently considered unsolvable due to data complexity and scale.  

Finally, she shares their perspective on the industry's digitization, noting that it is moving beyond just changing products to changing processes, which is a more pervasive change. They also point out that digitization is creating new business lines and that financial institutions are recognizing big tech companies like GAFA as potential threats. 

 

01:35:00 

The speakers discuss the changes and disruptions that are occurring within the banking industry due to technology and innovation, as well as the emergence of new players on the market. They emphasize the need for banks to consider new business models in order to adapt to the shifting landscape and stay relevant. Additionally, the speakers mention the importance of balancing complexity and security in order to meet the needs and expectations of customers. They predict an increase in embedded finance and the adoption of solutions that prioritize convenience and trust for customers. 

 

01:40:00 

The panelists discuss the importance of value in the banking industry and how customer behavior has changed due to various factors like the pandemic, technology, and global events. They stress the need for every transformation to consider the value it provides to customers, businesses, stakeholders, and employees. 

The panelists also highlight the significance of data-driven companies that treat data as a business, which will sustain their values and help them win against the competition. Additionally, they talk about the challenges posed by customer expectations, regulation, and new technology and how these make it necessary to rethink traditional banking models and revenue sources.  

Finally, the panelists touched upon the concept of citizen developers and how banks can leverage the knowledge of their young employees who have the ability to code to build their own tools without compromising the security of the bank. 

 

01:45:00 

The speaker emphasizes the importance of recognizing and utilizing the full potential of a company or bank, as well as developing new areas of potential. They note that partnerships can also be a way of being part of the solution and bringing in the same or even more revenue than before.  

The attendees are invited to read the full report with more insights on this matter.