The word digitalisation has been omnipresent in the financial industry in 2015.
But what makes a bank really digital? When is it a bricks and mortar, when a digital bank (or FinTech company with an offering of banking products/services)?
The Digital Bank Hard Facts
The following topics try to describe a purely digital bank with hard facts:
- The client communication happens via modern devices (connected to the internet) only, instead of personal contact and advice (there are no “bricks and mortar” branches).
- Use of cutting-edge technology. Additionally the digital bank was usually able to start on a “greenfield” with no legacy systems to integrate.
- The processes are fully automated (straight through processing). The business model is therefore limited to certain products and services (which can be fully automated) but also easily scalable.
- Finally and most importantly it is disruptive to existing players in the market. That means the digital bank will take away market shares through better pricing (enabled through the points above) and ease of use.
The points above show why having a sophisticated e-banking solution (including a mobile app) is not sufficient to be genuinely digital, but certainly a must for any bank. Being fully digital or not, on the other hand is obviously a strategic decision a bank has to choose. Possible strategies clearly are not only black or white, but different shades of grey.
I furthermore think the soft characteristics which can be heard regularly like client centric thinking, collaboration etc. are important too, but are hopefully also present in a long and trusted classical bank-client relationship. According to my consulting experience most of my private banking clients go the extra mile, to make their customers happy. Otherwise the digitalisation of the financial industry could happen quite Uber/Spotify like…