In today’s competitive market, the exponential growth of new technologies, and evolving consumer needs are fundamentally changing the course of the banking sector. Banks are expected to map a new direction in the race to deliver enhanced user experience, provide flexible digital banking solutions, handle increased regulatory scrutiny and improve the bottom line.

Legacy technologies can no longer deliver robust business functionality. Digital transformation can unlock huge benefits for the banking sector and drive strategic growth. Banks have already started to realize the importance of building a digital-first ecosystem with nearly 60% of modern banks investing heavily to develop digital capabilities.

Let’s take a look at some of the key benefits that digital transformation can drive in banks:

Deliver Hyper-personalized Customer Experience

Delivering a satisfying customer experience is very important to stay relevant in a competitive business landscape like banking. Machine Learning (ML) and sophisticated Deep Learning models can process data from multiple customer touchpoints and offer personalized solutions. Banks can leverage these intelligent technologies at every step of the sales funnel to personalize the banking services and products. Digital transformation can also help banks deliver an omnichannel experience.

Achieving hyper-personalization can have a huge payoff: According to Deloitte, about half of the customers who receive personalized services open new accounts with the banks. Offering tailored banking products can deepen customer relationships and enhance customer loyalty.

Data-driven Banking

Curating personalized banking products is hampered by the lack of capabilities to process and make sense of customer data. Deloitte reports that only 21% of customers received personalized guidance or advice from their bank between January 2022 and January 2023. Moreover, two out of three banks are unable to assess the context of a customer’s problem.

Digital transformation creates a data-backed model for banks to identify opportunities. One of the remarkable benefits of digital transformation in banking is that it strengthens the banks’ data analytics capabilities. It empowers banks to mine data to identify consumer preferences and act along the consumer journey. It can also assemble rich real-time views of consumer engagement and use advanced analytics to uncover actionable insights.

Conversational AI

Conversational AI tools summarize the conversations a customer has had with the bank’s agent. Banks can now easily address the customers’ problems by obtaining a complete picture of the customers’ interactions across various touchpoints.

Rather than having button-based, robot-like conversations, which is quite frustrating, AI-powered solutions serve as predictive engines. These self-serve tools offer interactive customer engagement. Banks can now empower customers to access their products and services quickly through the AI-supported solution.

How Gen AI Maximizes the Benefits of Digital Transformation in Banking?

Brick-and-mortar banks are now a thing of the past. In fact, 99% of banking processes are done remotely. When a bank’s business model is fundamentally digital at its core, and it succeeds at interweaving their current system with AI, it can achieve greater agility and efficiency. The benefits of digital transformation in banking go beyond merely automating a set of rules-based, repetitive processes like opening e-mails and attachments; digital transformation is reshaping the industry by navigating data integrations, creating seamless workflows, and improving security measures.

For example, Generative AI (Gen AI) has the tremendous potential to reshape the digital transformation efforts in the banking industry. McKinsey predicts that when Gen AI is fully implemented, the banking industry could deliver value equal to an additional USD 200 billion to USD 340 billion annually.

Gen AI has gained momentum in just a few years. Forbes reports that Gen AI adoption is expected to reach nearly 50% by 2025. Here is an intelligent platform for end-to-end digital transformation, accelerating productivity, and transforming experiences. It makes banks more efficient, improving time to value, and it makes customers and bank employees more productive.

In their list of top 10 banking trends, Forbes has listed Gen AI as the number one trend for 2024. The same report says that banks have the most to benefit from this trend: Gen AI is going to help banks increase their productivity by 22% to 30%. Deloitte’s 2024 Banking and Capital Market Outlook comes to the same analysis when it confirms that Gen AI can boost productivity for the front-office workforce by as much as 27%–35% by 2026.

Merely bringing traditional automation to streamline the banking processes is not enough. AI-powered solutions, a new frontier of automation, are embedding intelligent AI tools that are fueling an eruption of digital transformation and re-defining the way banks operate. We can be confident that AI-driven digital transformation will continue to revolutionize the banking industry for years to come.

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