Perennial technology challenges in adopting digital transformation in the BFSI sector - Krishna Raj Sharma, Director and CEO, iValue InfoSolutions

Digital transformation (DX) in orgnaisations across sectors has undoubtedly taken businesses to the next level. Furthermore, the Covid-19 pandemic is also driving DX initiatives across industry verticals, ensuring business continuity and the need to stay relevant and competitive.  Trends in BFSI industry are no different.  DX has to become the lifeline for financial services providers for future-proofing the sector.  On the other hand, we are already witnessing technology and Fintech companies offering financial services and the BFSI segment is also facing the uncertainty caused by major macro-economic conditions. The faster the challenges in adopting DX are addressed by the sector across commercial banks, PSU banks, Co-operatives, insurance companies, NBFCs, the better power it will have to respond to threats from outside. 

Digitalization of only core banking services is not sufficient

Today, we have more customers facing digital channels of banks than before.  Digital payments, financial transactions, data security are few aspects, which are constantly changing in the financial landscape.  Implementing digital transformation across all channels is key for increase in the client-base. Besides modernising the internal processes, customer facing applications should be restructured, simplified and made attractive besides being feature-rich, user-friendly and continuously updated.  If an app that can be downloaded on the customer mobile is not stable and convenient for users, the bank can easily lose customers to competition that is providing superior experience.

Lack of employee-engagement and empowerment

Happy employees build happy customers in any organisation but is all the more important in the financial services segment.  However, many a time this aspect of engaging employees and involving them in the decision-making processes is often over-looked, with more emphasis placed on systems and processes. Ineffective employee engagement is an area of concern.  Yes, it is true employees who have worked in a traditional banking environment for too long will have initial reluctance in learning new skills required for digital transformation.  The onus lies on the leadership team to ensure employees are provided with education and training opportunities on new systems, processes, and product offerings and also made aware of external threats in the absence of going digital.

Tailored demand from customers are overlooked

Addressing a broader demographic audience by financial institutions is a thing of the past. Continuing with this style of functioning is a sure recipe for failure.  Today, there is a constant demand from both retail and institutional customers for tailored products to address their pain-points and gain positive experiences.  To retain customers, banks and NBFCs have to deliver customized product offerings by leveraging predictive analytics and responsible data-driven insights, based on market needs. Customers will reject generic offerings by banks which are designed only for the institution’s profitability, e.g., millennials, women entrepreneurs or senior citizens have different needs to be met by banks.  Switching brands is the next normal where one unpleasant experience or a complex solution can drive the customer to turn to the competitor.

Poor implementation leads to financial and reputation losses

The team of experts involved in the implementation of the DX should be extremely competent and adept at it.  The digital solution should be configured and deployed after taking all relevant factors into consideration, without impacting critical business flow. Seamless and safe integration of all business processes and innovations will eliminate data breaches, which otherwise could have resulted in financial and reputational impact.  With the involvement of huge funds and associated risks, the approach to DX should be carefully calculated for data safety.  Furthermore, the digital solutions have to be updated regularly. 

Mature financial Institutions are sometimes risk-averse with a value-driven mindset focusing on short-term deliverables and digitalizing only few areas, which many prove costly in the long term. A visionary thinking and a holistic digital transformation implementation will assure better future growth for the players in the BFSI sector and lead them to succeed and stay ahead of competition.