‘Digitisation of economic activities through ‘looking glass’
Digitisation is not just a buzz today because virtually all forms of industry and organization, even individuals are digitising. Technological advancement and its application in the field of life sciences, medicine, telecommunications, e-commerce, CleanTech, FinTech, financial services, charity and News Space are heralding the new era. We are a privileged generation with a balcony seat witnessing a massive change across all industries.
If you just pause for a moment and think about what is causing this rapid change, you do not have to look too far. Any processes or delivery, which has any friction is susceptible to change with application of new technology.
It is not surprising that the financial services industry and its institutions are embracing change by applying technology to make their processes as frictionless as possible, thereby improving efficiency and customer experience.
However, adoption to change has some nuances. There are institutions, which are changing core processes de novo and there are others that are changing the front end with back end processes being run in an analogue mould. The latter approach is a hollow story, which effectively is “digital to paper” with scores of people running around to get the fulfilment right rather than a complete “zero touch” process.
Admittedly, local regulation in many countries require companies to inject analogue processes but from the beginning the design must be fully digital and “zero touch”. It also implies that as an industry. we have an obligation to help the regulator in developing white papers allowing for reforms with the aid of new technology.
It is worthwhile to note that in the banking industry most of our processes have liberal dosage of analogue steps. With the advent of technology, many of the steps are today being challenged. A typical retail customer today looks for convenient experience along the following lines: Convenient and easy to open relationship; maintain accounts; 24X7 access; pay bills; efficient to bank; easy fund transfer; easy to use; cost effective and transparent charges; and provide competitive rates.
If you probe a little further, all of the above are a must, along with interactive active capability. Most of the functionality today is designed as a push or pull. Very few from the very inception are designed to be interactive.
From design point of view, this is counter intuitive. Human beings by nature prefer interactive sessions. This does not necessarily mean that a human voice needs to speak with you but from a process point of view it ought to allow for continuous feedback and real time status enquiry.
To seamlessly allow for such capability, developing an ecosystem through strategic tie up is critical. Financial institutions participating in the banking industry cannot operate in isolation but need to develop digital bridges with Credit Bureau, Central Banks, national registry, telecommunications companies, entertainment and national utility companies.
Once the ecosystem is developed, customers can see the real benefit as application forms get interactively prefilled with minimum effort to update, thereby considerably reducing completion time and improving customer experience.
There are many facets of digitization, some of which we are familiar and some more likely to challenge the future. For starters, it is true that digitisation now allows for more inclusive banking and without necessarily investing via expensive branch network expansion.
The so-called inclusion of bottom of the pyramid banking is no longer elusive. True financial inclusion through strategic tie ups coupled with digital platform capability is increasingly becoming economically feasible for financial institutions.
At Standard Chartered Bank, we are committed to building a true end-to-end digital bank in our market, which addresses all the issues outlined in this article. We are excited about future digital roll outs across key markets in Africa, which holds the promise to change the way we bank forever! There is lot to be said but it is best we hold our horses and watch this space!
Futuristically, while cryptocurrencies have been in existence for a while, the current known processes have their own limitations along various key attributes of regulation, ease of use in day-to-day activities, currency creation, including backstop and governance, protocol covering, cost of transaction and distribution with validation effort. Almost all service providers today have established weaknesses. It is only a matter of time, before an evolution in protocol addresses the friction.
Just to leave you with a sense of opportunity, globally there are two billion people unbanked and according to some estimate, a $4 trillion credit gap facing SMEs. It will not be long before an evolution of protocol addresses this friction. When it does happen, remember I told you so!
• Gupta is the Regional Head, Retail Banking, Africa and Middle East, Standard Chartered Bank.
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