Digital transformation in finance: Definition and tips
In recent years, there has been a rapid increase in digitalization. A huge number of businesses have moved to the Internet and have also been digitized. Finance is no exception. Such a step has significantly improved customer experience and made financial services available anywhere in the world. In this article, we will describe in detail what digital transformation in finance is and what types it can be.
Definition and features of the digital transformation of finance
Digital financial transformation is the process of improving or optimizing financial activities/products through the use of digital platforms, transition to the cloud, and process automation. All this became possible thanks to the emergence of smartphones and PCs, related technologies, and their popularization among users.
Every day, device owners download a huge number of applications, including financial ones. Users appreciated the ease of use and the availability of finance, so the demand for such products became inevitable. As a result, organizations that want to remain competitive must follow the path of digitalization.
Despite the proven effectiveness, there are still companies whose leaders believe that personalized service has a much better effect on the level of customer acquisition.
Challenges encountered in digital transformation
Since there are many fintech companies today, customers often make payments directly without involving banks. This is pushing traditional banks out of the chain. However, the banking system is more reliable and regulated by the relevant authorities. Therefore, during digital transformation, they have incontestable advantages.
Any operation that is carried out in a bank must comply with the security requirements for protecting personal data. Their transfer can seriously threaten the reliability of storage and is fraught with information leakage. Therefore, some financial institutions are hesitant to go digital.
Careful study of user needs
In order to offer customers an effective solution to their problems, a competent strategy and the right approach are needed. This requires thorough research and investment in marketing.
Operating systems are constantly being updated and changed, which means they require costs and investments. Companies should regularly monitor the latest changes and have their own IT department or external IT specialists.
Key benefits of digital transformation
A huge number of companies have chosen the path of digital transformation. This is due to a number of advantages.
- Improving the efficiency of employees. Automation of routine processes leaves more time for creativity and strategic thinking.
- Human factors cause no errors. Having a single database for sharing and regularly updating data reduces errors to a minimum.
- Improving the quality of customer service. Users get a fast solution from anywhere in the world.
- Security improvement. A competent approach to this issue will increase the reliability of data storage.
But all this is possible only when relevant tools and optimal ways of their implementation are chosen for the company. To achieve this, you need to clearly understand your needs, regularly monitor trends in the world of finance and implement them in a timely manner.
6 changes that came to the financial sector with the advent of digital transformation
There are several areas in which digital transformation is actively used today in order to improve services for customers:
- Mobile banking has become a daily routine. With the increased use of smartphones, new technologies have been introduced. They allow the client to access their finances, data and make transactions anywhere. According to the data, 203 million people use digital banking services in 2022. At the same time, according to forecasts, by 2025 their number will increase and amount to 216.8 million.
- Candidate banks are gaining popularity. Digital-only banks serve customers more quickly and smoothly than traditional banks.
- Fintech solutions. It is a solution for any request: revenue tracking, budgeting, and creating a chatbot for customer service. They are developed by fintech companies.
- Digital investment. This is a more independent income for investors and platforms that are more accessible than traditional ones. It can be all kinds of cryptocurrency exchanges, etc.
- Online consultations. These are algorithms with personalized recommendations on a financial topic for clients. With their help, a person does not need to contact consulting companies. It is enough to have a smartphone and access to the Internet to get professional advice.
- Blockchain. This is a modern way of identification, and storage of archives in a digital state, a change in investment. With its help, users get decentralization and the ability to anonymously carry out various transactions.
How to carry out digital transformation?
If you have decided on the need to introduce new technologies, we suggest that you familiarize yourself with several steps for implementing a digital transformation in a company.
- Define leadership roles. This is especially important as technical tasks become automated and workers have time to tackle more strategic and analytical tasks.
- Define barriers. Only by knowing what can interfere with the path of development, you can find a way to eliminate it. Therefore, take care of this at the beginning of the path in order to choose a winning implementation strategy.
- Identify opportunities for automation. There are many options to help streamline processes such as customer registration, financial data management, transaction processing, and more.
- The right motivation. Digital transformation is not reformed for the sake of reform, but as a step towards improving business efficiency and increasing revenues.
Summing up, we can say that with the right approach and well-chosen strategies, any financial company can carry out a digital transformation and get the expected result. A professional action plan will help a business increase profits, expand its customer base, and outperform competitors. The financial sector today is developing rapidly and rapidly. Therefore, to maintain a position in the market, it is important to act deliberately and take into account the needs of the target audience and business.