The future is digital: Why financial institutions need to embrace digital banking

• Embracing digital opens new opportunities for financial institutions
• Organisations that are open to change and try new ideas are the ones that will thrive
• Launching digital banks is favourable because of its agility and scalability, among others

Digital banking is the way of the future for the financial services industry in Asia Pacific. As more countries throughout the region embrace this brand-new world, financial institutions of all sizes need to consider the opportunities that digital banking can open up in terms of optimising operations and increasing new customer acquisitions.

Many established institutions are realising that spending millions of dollars building a proprietary system and expecting it to last for the next decade is not a viable option. It is imperative that these institutions evolve. In fact, McKinsey & Company estimates that legacy financial institutions that fail to evolve will see profits decline by up to 60% by 2025.

“The businesses that will truly thrive in this new decade are those that see change as an opportunity, and that are open to new ideas and ways of doing things,” said Myles Bertrand, Managing Director for Asia Pacific at Mambu, one of the leading cloud-native banking platforms. He gave four key reasons for launching a digital bank.

Why Launch a Digital Bank?

Integrate multiple products

In a traditional, siloed banking system, individual functions such as a branch, internet platform and mobile app are all managed separately, with customer data withheld between functions. Switching to a digital platform and integrating these functions will give banks a single view of customer data, allowing them to shed their legacy infrastructure and gain the ability to digitise and automate their core processes, all while eliminating errors and duplication.

Become agile and responsive

Digital banks are lean and agile, can grow and scale rapidly, and can be responsive to their customers, providing a best-in-class customer experience.

To stay competitive, banks need to be able to roll out products and services at a rapid pace, adding new features to platforms, while enhancing existing ones. This kind of agility is next to impossible to achieve with most institutions’ legacy systems. However, composable banking architecture – the quick and flexible assembly of independent systems on a cloud platform – provides the opportunity for organisations to create a nimble platform with intuitive, responsive features that can be quickly and continuously updated.

Exceed customer expectations with customised products and services

For a digital bank, holding deposits and facilitating digital payments is more than just a core function and revenue source; it’s a rich trove of priceless customer data. Today’s top digital banks set themselves apart by developing custom credit offerings based on this data. For example, a user looking for information on real estate or mortgage products can be presented with a home loan product and automated follow up. In the digital banking era, customers’ needs must be constantly anticipated, turning the bank into a trusted advisor who is always on the lookout for customers’ best interests.

Keep customer data safe and secure

Businesses that make the transition from less secure legacy systems to cloud-based digital platforms, where security improvements are constantly made, can boast of greater peace of mind and set themselves ahead of competitors.

With cloud technology, they can offer added security to customers while seizing upon advanced analytics to automate and streamline decisions across the end-to-end banking value chain.

“By partnering with a proven digital platform like Mambu, and encouraging broad developer collaborations, banks can build innovative integrations into any offerings for simple, streamlined and automated customer experiences,” added Bertrand.

Institutions that can move at the pace of a technology company while remaining committed to strength, security and service will be the leaders of this new era.