The Speed Of Digital Transformation In Banking
Digital transformations are impacting the banking and financial services industry in ways that will result in a completely new and different competitive landscape. Banks need to understand and respond to these changes with a sense of urgency that leads to bold strategies and technology adoption.
Across the world nearly 5 billion people are using mobile phones which is two and a half times more than the number of global bank accounts. In emerging markets there are even a higher percentage of mobile phone accounts to bank accounts. By the end of the year 3 billion will be connected to the Internet.
The increasing adoption of mobile technology, and mobile banking apps in particular, around the world is presenting operational, governance, and time-to-market challenges in banks that traditional IT approaches were not designed to address. The ability to support real-time mobile interactions, and to expand those capabilities with banking customers is critical.
In Brett King’s book titled Bank 3.0 he discusses the revolution and upcoming demolition of traditional banks in light of mobility. Here are some interesting numbers from the book:
• In 1980 - credit cards took 14 days to approve, personal loans 7-14 days, home mortgages 30+ days.
• In 2008 - credit card were instantly approved, personal loans pre-approved/24 hours, home mortgages 24 hours.
The increase in speed of processing between 1980 and 2008 was primarily the result of the Internet evolution and online e-commerce. Now jump forward to 2014 and broadband Internet, mobile devices and mobile apps are causing the next dramatic increase in tempo. People with mobile devices want instant access to their personal account information. They want their business relationships and shopping experiences to be wonderful, convenient, digitized and instant.
Many banks today are working with legacy systems that were never designed to support real-time mobile interactions. Hard decisions are now required to prioritize IT investments in order to ensure the ability to support the tempo demanded by mobility.