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The digital transformation of banking



Only a few weeks ago the new £20 note was released. A sign of the times, one feature of the £20 note is an augmented-reality-homage to the painter JMW Turner. When placed under a Snapchat filter, the portrait of Turner transforms into a living piece of his artwork. The traditional banknote is digital in the realm of social media. This new tech-note just shows us that banks, too, are playing their part in the technological revolution.


However, while people were sharing Turner's artwork on social media, the release of the new note did spark a separate conversation on the position of our banks today. Are Snapchats being shared more than banknotes? Maybe. Maybe not. But the circulation of new notes over the last few years has drawn attention to the fact that cash is a diminishing element of our day to day transactions. In 2017, cards took over cash as the most used method of payments in the UK. Today, you can buy most things with a contactless 'Tap'. While we are by no means a cashless society, spending culture and customer behaviour are changing. Banks are having to change too. By incorporating automation into their infrastructure, banks are adapting to this ever-changing landscape and improving their customer service to meet modern consumer demands. With the rise of challenger banks and FinTech, this is something they will have to do to keep up. 


Banks have existed since the 1600s, and over hundreds of years, they have experienced the ups and downs of the country's history. Moments like the industrial revolution and the emergence of the high street saw growing trade and branches increasing in number. But the financial services have also been hit by the likes of war, depression and the more recent financial crisis only 12 years ago. With increasing uncertainty in today's climate, banks have yet more hurdles to overcome. One thing that the boom and bust of the past can attest to, however, is that banks have faced many challenges and come out on the other side. But there are still more trials to come as digital transformation moves us into the future. Disruptive technology is challenging banks to look inwards; to rethink their customer service efforts and the legacy systems that are slowing them down.


Banks have always embraced technology when faced with customer demands. In 1967 Barclays introduced the first Automated Teller Machine (ATM) in London, enabling customers to solve their inquiries themselves. More recently, contactless payments have come into the mainstream. We want answers at the click of a button. This is the case when it comes to our spending habits, as a third of all credit card payments in the UK were contactless last year. This trend will only increase as customers look for convenience and immediate results. Just like the ATM 50 years ago, automated solutions are crucial for banks to deliver what has now become expected of them.


As spending habits are going contactless, customers also want to manage their accounts online for a similarly fast and hassle-free experience. The rise of online and mobile banking provides customers with more autonomy over their finances. In February, HSBC announced they would be closing 27 branches across the UK. This is not an unfamiliar sight, as banks on the high street are closing their doors and focusing on their online presence. A move into the digital world is a move to the new banking environment we can expect. Automation speeds up time-consuming processes, and staff can spend more time on stimulating tasks and adding value to their service. Customers do not need to visit a branch for a simple enquiry when bots can answer queries in minutes. By choosing automation, banks are directly responding to the public's banking behaviour and delivering results. The online banking experience becomes smart and tailored to specific needs, giving customers answers at their fingertips.



With automation processes can keep the human in the loop. Banks deliver smart and fast service while maintaining the human element to ensure that customers are looked after and data is correct and protected. For the older generation who have always valued social interaction as part of their banking experience, this is integral to keeping their faith in the bank. The younger generation, however, is a different demographic whose expectations align with the modern world of apps and social media. Particularly for Generation Z, a tech-savvy generation that has grown up with smartphones, everything (including banking) is done via an app. With the likes of Amazon Prime, Apple Pay and PayPal, this generation has now come to expect fast delivery of information and products at any time of day. Many banks are already creating value from automation. However, the newer challenger banks, in particular, are directly responding to these modern expectations with their easy to use apps. The challenge the traditional banks now face is exploiting technology to get ahead of the game.


The influence of challenger banks and FinTech is continually growing and driving innovation in financial services. Banks such as Monzo and Starling are attracting many because of their tailored and convenient service. They are changing the way we choose to bank and are pushing traditional banks to change as well. These companies benefit from having no legacy infrastructure. Running on one system, they can offer highly efficient service. Traditional banks, therefore, have to find automated solutions to solve the problem of their legacy systems. Traditional banks must deal with lots of data in multiple different systems. Navigating through this complex infrastructure for a simple enquiry is significantly time-consuming and therefore costly. With heaps of historical data and systems that have existed longer than Generation Z, banks struggle to become as agile as competitors. Legacy systems are often maintained as the job to replace them is expensive and the data they hold is integral to the company and continually in use. To rip these systems out and replace them would be costly and take years. Instead, Intelligent Automation can join these systems together, bridging the gaps that a human would typically have to resolve. Connecting legacy systems in this way transforms them into a more efficient, user-friendly system. Banks can now keep up with the competition, becoming as efficient as those running on a single system.


FinTech and challenger banks may, at first sight, be seen as a problem, but this is not always the case. It is inevitable in today's world that we will see a shift to a more automated banking experience. Banks are, therefore learning from the FinTech revolution, some even working with FinTech companies to provide the best technological solutions. But technologies continue to disrupt the banking world and innovative solutions are required for the traditional banks to keep up. 


From the ATMs to online banking, to the new £20 notes on Snapchat, banks have always used technology to enhance their services. With customers wanting faster and more autonomous experiences, banks are having to deliver intelligent solutions. Competition may be driving innovation into the financial services, but banks, too, are embracing automation to meet modern demands and join the tech revolution.

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