Banks Have Never Been Dinosaurs
Puedes encontrar la versión en Español aquí
As opposed to what Bill Gates famously stated in 1994, I believe that the banking industry has constantly evolved to survive the change in its environment. When I was invited to speak at FINNOSUMMIT Miami last week, I had the opportunity to explore how they’ll continue to do so in the future.
FINNOSUMMIT Miami brought together the most innovative Fintech startups from Latin America with leading industry executives and renowned investors, so it was a challenge to speak against one of the most settled ideas in the bank industry.
Bill Gates famously compared banks to dinosaurs in 1994, and while I understand how he could have thought that at the time, with 24 years of hindsight, we can now see how they’re fighting back.
From a bench in a park to the modern banking system, the industry did what every species has done in the past million years to survive: it evolved. As users, nowadays we can access a world of possibilities that the first-era bankers couldn’t have even dreamed of, and all multiplied in any device we might want.
A user-centered evolution
The tempo and rhythm with which banks evolved was always set by the user’s needs, and this is what banks understood years before other industries: the consumer has to be put in the center of operations.
Other companies are just now starting to gather consumer data and generating solutions specifically for certain audiences, while the banking industry has been working in hyper-personalization for years.
Nowadays we’re talking about fully digital banks: banks that can be accessed anytime, from anywhere in the world, and through any device. An open bank that doesn’t require you to change your daily life to use it, but who’s main objective is still the same as it was on that bench: connecting people.
Not only did they follow the user’s pace and reacted accordingly, but they also did so by streamlining processes and innovating internally: the automatization of back-office operations and transactions are not new things for the financial industry.
The industry has done a great job in understanding what the current user wants: we want to be know by name, to be considered as individuals, we want an agile service, and we want a bank that’s connected and readily available for us.
The future is automation
Artificial intelligence (AI) promises to improve efficiency, potentiate employee performance, and reduce costs and operational risk. With the development of AI, robots can replace manual and tedious tasks, interpret communications with lots of text, make decisions based on pre set rules, provide suggestions to clients, and track workflows between computers and humans.
In fact, the banking industry invested 1.9 billion in process automatization in 2016, 72% more than the next industry on the list (aside from tech, of course). Current research suggests that the investment in AI from the financial industry will be of 7.5 billion for the next year, way above the market trends.
AI: Learn from others’ mistakes
Automation is not just the mindless generation of chatbots. It’s very common for current organizations to generate hundreds of bots to automate repetitive tasks that have no lasting impact in the company’s efficiency or effectiveness, nor are they aligned with their long term goals.
Other companies started automatization processes only to realize half way through that they lack the capabilities or the know-how to follow through with the appropriate transformation, they start changing the processes on the go and end up with mix-and-match of different processes and solutions that end up causing more harm than good.
We need to take advantage of these opportunities to generate a lasting impact and tangible improvements, whether it’s in our user experience, financial predictors, or any other project we may want. Machine learning and artificial intelligence are a disruptive force but only if we manage to used them to generate added value we’ll be succeeding in automating at scale.
How do we make a smart investment in digital transformation?
At Wolox we partnered with many banks and fintechs over the years and we’ve learned what it takes to succeed in digital transformation. These are my three keys for a seamless experience:
- Carefully choose the first pilot area
Make sure that you’re starting the transformation in an area and environment that are prepared for it: since its leaders will be the ones responsible for this venture’s success they need to be champions of change. Bear this in mind when you choose you first move, as it will condition the entire project.
2) Ensure an IT partner
A great tech partner makes the difference between failure and success. Only if you’re fully committed to each other, communicate fluidly, and establish the expectations of the project early on, you’ll have a successful experience. Ideally, you’ll have a symbiotic relationship because a misunderstanding could make or break your project.
3) Build momentum and capture value
Automation is imminent in our future but we have to make sure that we’re doing it right. While it’s much easier to start small and only automate partial processes without changing much of the foundations behind it, this won’t lead us to the lasting and sustainable change the users and consumers are demanding from us now. This small “improvements” don’t have the power to keep us from becoming extinct, and our return of investment will be undoubtedly much smaller.
Don’t be shy, make a bold move
Organizations nowadays, need to have an holistic view of optimization to attain real digital transformation and gain a real competitive advantage over its competitors.
As tech partner, at Wolox we have driven this process along with corporate banks and fintechs. Contacts us! We’d love to work with you in this transformation.
