Developments of the past two years have reshaped our expectations of normality forever, as we adapted to new patterns and ways of living and working. One such change that is irrefutable is our reliance on digital connectivity and infrastructure for all aspects of our lives both at home and work.

For some sectors, the pandemic accelerated digital transformation. Banking was not left behind as emerging technologies sharpened resiliency, ensured continuity and enhanced customer experiences in a short span of time.

Customers responded positively and adopted these new services, albeit in some instances there was no other choice as brick-and-mortar facilities and contact centers at one moment or another made way for the new normal.

An agile, data-driven future

The role of banks is shifting from taking deposits and lending money to providing embedded services as organizations embrace Industry 4.0.

Banks are integrating new technologies, Internet of Things (IoT), cloud computing, analytics, AI and machine learning for intelligent data-driven operations – as they work on being both digitally available as well as being digitally visible. In fact, many of the banks we know and trust are turning to the cloud to deliver the fast, personalized customer experiences that are at the heart of their new digital-first strategies.

The following three factors will play a key role in the upward trend shaping the further development of digital services:

First, is increased digital awareness and comfort amongst customers. Some customers of different demographics downloaded banking mobile apps for the first time during the pandemic. They overcame a big hurdle and enjoyed the convenience and speed of solving simple inquiries. Moving forward, analog ways of working will be too slow for customers for most of their interactions with banks.

Second, is the existential necessity of delivering operational excellence. Banks will need to continue to optimize and streamline people, processes, places and technologies, and focus all resources on core services and concrete objectives and outcomes. Until interest rates and revenues start to rise again, banks will continue to automate and redesign processes.

And finally, regulatory and compliance requirements will continue to rise across the board. With regulations on the rise, so too are compliance challenges. According to the IBM Transformation Index: State of Cloud report 53% of global technology decision-makers believe that ensuring compliance in the cloud is currently too difficult and nearly one-third cite regulatory compliance issues as a key barrier to integrating workloads across private and public IT environments.

In financial services, more than a quarter of respondents agreed that meeting industry requirements are holding them back from fully achieving their cloud objectives. As many regulators urge organizations like financial institutions to use multiple clouds to mitigate systemic risk, a holistic view across their hybrid cloud environment can help companies demonstrate their compliance faster-freeing up time and resources to drive the digital innovation today’s consumers demand.

Saad Toma, General Manager for IBM Middle East and Africa.

Rising expectations for personalized experiences

Banking customers expect exceptional, seamless omnichannel experiences and innovative products at a value. To create a lasting advantage and retain trust, retail banks need to gain insight into customers’ current and future needs and how to meet them.

“As consumers’ preferences for digital and mobile solutions continue to grow in East Africa, financial institutions should utilize emerging technologies that reduce risk and increase security, ensure compliance around critical highly regulated processes all whilst increasing innovation. AI and hybrid cloud are the two most essential capabilities to effect change and fuel modernization across the financial services industry to meet the growing demands of digital-first consumers. IBM’s capabilities across IBM technology, consulting, and our IBM Ecosystem have already helped traditional financial institutions and FinTech start-ups propel into an age of digital disruption”, says Caroline Mukiira, General Manager, IBM East Africa.

The push for open finance could facilitate these demands using application programming interfaces (APIs)—the connections that enable applications and systems interaction to build new offerings. These APIs allow developers to create new applications that use capabilities from a much broader ecosystem of service providers, enabling banks to innovate with more agility and speed.

“With the liberalization and growth of Ethiopia’s telecom sector helping to increase the adoption of digital technologies, the demand for personalized digital banking experiences is on the rise. Our partnership with IBM has offered us the ability to enhance our integration capabilities, and increase our speed to market, agility, security and quality of integration tasks. We can already see these benefits on Amole, our omnichannel banking platform, which is using IBM Cloud Pak for critical transactions such as money transfers, mobile wallets, etc to streamline operations and improve digital experiences for our customers,” says Shimelis Legesse, Chief Information Officer, Dashen Bank.

Focus on sustainable banking supply chains

Dramatic disruptions and the increasing importance of macroeconomics and sustainability factors to supply chains have thrust Banking and Finance Chief Supply Chain Officers (CSCOs) into the strategic spotlight. Those establishing data-driven workflows, insights, and actions are positioned to deliver a compelling competitive advantage

“To effectively tackle unprecedented supply chain disruptions, Banking and Finance, Chief Supply Chain Officers, CSCOs, must increase investments in automation, AI and data-driven workflows, ecosystems and sustainability. According to the recent IBM Institute of Business Value Study, 47% of Banking & Financial Markets CSCOs are expecting sustainability initiatives to substantially change their supply chain models.” shares Saad Toma, General Manager for IBM Middle East and Africa.

A six-point plan for success

As banks mature in their digital and organizational capabilities, the following plan can help them transition into a technology-enabled platform business:

• Center everything around customers. Use data to understand them and create relevant offerings, experiences, and interactions. For the selected segment, ask how essential banking services can be simplified, automated, embedded and even made invisible. Start with a smaller number of use cases and learn from them.
• Adjust internal metrics to measure what matters in operating a technology platform business. For example, trends in the number of defects per X lines of code, developer productivity improvements, the speed of provisioning environments, releases and digital customer interactions.
• Explore forming commercial relationships with external partners that are willing to share investments and rewards.
• Technology and Architecture. This presents the biggest risk and opportunity for banks as systems get more complex and interconnected. Using emerging and exponential technologies can help banks simplify and personalize customer interactions. Working with vendors that have security and controls baked into their offerings can accelerate the building of end-to-end solutions and services.
• A transformational journey of this scale and magnitude requires new sets of hard and soft skills. Make attracting, developing, and retaining talent a top priority.
• It is imperative that CSCOs focus on using analytics, AI and automation initiatives to build intelligent, resilient, and sustainable supply chains. Establishing data-driven workflows, insights, and actions are the need of the hour to truly deliver a compelling competitive advantage to the banking and finance industry.