Full digitalisation a must for banks

Representatives from four banking associations were in agreement that full digitalisation of banking services is an immediate necessity and that the pandemic has only accelerated the schedule as they spoke in the Bankers Association for Finance and Trade virtual forum.

“The route obviously is digital,” said Bongi Kunene, managing director of The Banking Association of South Africa.

“Unlike in Europe and the US, we do not have 100 precent coverage of our population in banking. Given that we have a very young population, and most of them are growing up in the digital age. I do believe that digital banking, in all spheres, is going to be the way to go.”

In the US, banks were already on the digital journey but the pandemic has accelerated the timetable and changed consumer preferences, according to said Rob Nichols, president and CEO of The American Bankers Association and Chairman of The International Banking Federation.

“The pandemic has changed how the customers of banks in the US interact. They went to their bank for one thing in one way. Now clients in part because they’ve been homes for six months are saying ‘I need this service from the bank. I’ve never done it digitally. But I can’t go to the branch. I can’t leave my house. Wait a minute, they offer it in this way. That’s fantastic.”

Sunil Mehta, chief executive of The Indian Banks’ Association said that because of the pandemic, banks in India are now allowed to do KYC through video and that onboarding of new customers in happening through remote channels.

In addition, Indian banks were also further increasing their digital services like applying for and approving of loans through digital channels.

“During this pandemic there was a greater transformation into the digital lending space. online personal loans were made available, which were before only down ‘manually’. Online sanction schemes were created for small and medium businesses for loans as well,” said Mehta.

However, the move to digitalisation is not without its hurdles. Kunene said the South African government has asked banks to slow certain aspects of digitalisation in order to keep jobs in the short term.

“The trend for the past three to four years in [South Africa’s] banking industry has been a rapid move towards digital platforms. As we’ve been adopting digital banking platforms, a number of jobs have been lost in the sector. At the start of this period, there was that understanding that we in the banking sector were not going to shed jobs for a little while to stabilise the economy.”

Bankers also feel that bigtech is not in a position to overtake banks as the primary point of contact for consumer finance.

“The large tech market players in the United States are not really poised to take over banking,” said Nichols. “Despite the financial crisis banks are highly trusted in the United States, that the data the banks hold will not be abused or used improperly.

While bigtechs have used consumer data in an effort to better the customer experience, banks have so far been very conservative with how they handle customer data.