Striking the Right Balance for Digital Transformation

Maurice Lisi, Head of Multichannel & CRM S/D, IntesaSanpaolo

For years there has been talk of “Disruption” in the banking sector. For years we have dealt with the issue of how technology, the birth of the Fintech concept and the birth of the new Digital Banks would have redesigned banking.

It is inevitable that the banking market could not be immune to this transformation; indeed, the banking market is certainly one of the industries most impacted by digital transformation processes.

The evolution of technology, the digitisation of the distribution model and the evolution of consumer behaviour have been in the recent decade on the agenda of all the CEOs of the Banks, and has seen important investments in "Digital Transformation ” across all major banking groups.

The banking sector has always been identified as one of the most traditional sectors, still revolving around the Branch and on paper, but at the same time it is and has been one of the most regulated sectors, which is why not all digitisation processes - despite significant investments - have proved effective.

The advent of Fintechs and Neo-banks has certainly placed additional pressure to the digitalisation process of banks, revealing the importance of the customer experience. Small enterprises, mainly built by teenagers, have managed to spot business models that in the past were prerogative of the banks, creating a strong specialisation in the delivery of the same service in a completely digitalised perspective. Being specialised and with a strong focus on customer experience has proven to be a winning model, especially from the customer's point of view. In recent years, the banking market has thus managed to fill an important gap in customer experience management, offering services that banks have never been able to provide in the past. Areas such as instant lending, instant x-border payments, Remote Customer Identification etc. have been discovered, all processes and services built around technology.

Recently the Fintech and Neo-Bank market has raised important questions on the sustainability of their business model, and on the ability to generate value for investors, especially considering that in the European market 90% of the assets were and are still managed by traditional banks.

Following the historical evolution, we moved from a competition model between Banks and Fintechs to a Partnership model. Banks have discovered that they can leverage the ability of Fintechs to manage user experience, and at the same time Fintech and Neo banks have understood the importance of building a sustainable business model.

The recent health emergency has heightened the importance of digital transformation process in banking system. The "Branch and Paper-based” model is no longer sustainable, and most likely, the Covid emergency has boosted the distributed banking model by aligning the transformation process.

“The “Branch and Paper-based” model is no longer sustainable, and most likely, the Covid emergency has boosted the distributed banking model by aligning the transformation process”

All banks, and even more so the largest banking groups, have transformed or are transforming their business model, combining technology and the human component. In the past 12 months, the Human Technologists model is certainly the main theme on the agenda of banks' Executives.

For years, banks had been able to move the defined low-value business (payments, instant credit, etc) to digital channels, but leaving main high-value processes still based on Branch models.

Creating a synergy between the two worlds, combining “technology” with the true value that incumbent banks have - the people - is designing the new way of being a bank and the new distribution model for banking services. Many banking institutions today allow people and companies to manage their business remotely, exchange documents digitally, sign documents digitally. Each physical representation of the bank gradually becomes less significant, the advisor becomes a key element able to complement the use of technology, and enable the delivery of high-value services. Today it is possible to remotely manage investment services, evaluate mortgage, analyse and grant loans to businesses.

What has happened in the recent decade has completely redesigned banking, and inevitably this is a journey of no return. The entire ecosystem that built the banking business will be forever transformed: the distribution model, the people, the products, everything that has been the "way" of being a bank for years, will be forever redesigned, and the recent health emergency has significantly accelerated the transformation process.

If I imagine the path that led the banks from the 2008 economic crisis to today, it certainly represents the most significant transformation amongst the different industries. The question is: Are we really at the final credits of this long transformation film, or is it all just the beginning?

It is difficult to find the answer, it is important to continue to ask the question and be supporters of the transformation.

Customer Experience