The rapidly digitalizing banking industry is set to unearth a whole new wave of opportunities through smart, new business models. Providing customers with a fast, seamless, and convenient way of accessing their finances can give banking institutions a competitive advantage while also enhancing user experience. Digitization of traditional banking processes and transactions have forced banks to consolidate and redesign branches as well as making job roles more advisory-centric.
However, this evolution does come with its fair share of challenges. Banking institutions are left with legacy systems and technologies that revolve around individual products and channels. Firms are now faced with the task of having to invest monumental sums to get systems that are up to speed with the prevailing technology.
Digitization of banks has also accelerated branch closures (2000+ closed in 2017 in the USA). Digital technologies usher branch transformations wherein banks operate with fewer branches and engage self-service systems with minimal staffing.
Digital spending in the banking industry is highly consolidated among the top 30 banks with analytics, AI and RPA being top areas of investment. The total technology spends amount to roughly $260 BN. JP Morgan Chase leads the technology investment race with over $10 BN in total investments. Wells Fargo and the Industrial and Commercial Bank of China are the next highest investors.
Roughly 79% of the digital workforce in banking is consolidated in North America and Europe. International banks have chosen US, UK and China as major hotspots for their digital centers. The US continues to be a key decision-making center which is evidenced by the high number of digital centers in the region. The growth in the Asia-Pacific region is fueled by Chinese giants such as ICBC and Bank of China.
Increase in the number of digital use cases has led to the emergence of newer digital hotspots in the US. Increase in the number of digital use cases has led to the emergence of newer digital hotspots in the US.
Digitization of banking operations has led to some job roles being deemed redundant or obsolete or leading to enhancement and consolidation in several cases. Disrupted employees are moving to new roles within the industry. The traditional teller role, which encompassed processing deposits, withdrawals and other banking transactions for a high volume of customers have now evolved into that of a personal banker or branch manager where the role is now more advisory by nature. The accountant’s role has also evolved into that of a financial controller or underwriter post digitization.
