What's Next in the Pipeline of Digital Transformation for the Banking Industry

What's Next in the Pipeline of Digital Transformation for the Banking Industry

  • Pawan Jadhav
  • May 19, 2021
Category: Intelligent Automation, Banking, AI

When we say Digital Transformation, doesn’t mean anything that we did manually on paper shrinks into a computer or mobile screen, and thus, banks that are all about paper suddenly become paperless. Well, digital transformation is way beyond.

The novel 2020 pandemic gave a shocking spin-off to every single sphere of our life. From the way we live to how we work, everything inside and around us transformed. Digitalization which was already happening at a rocket-speed all over the world; accelerated further during the lockdown period and people and businesses started adapting to technologies as fast as possible accepting the fact that it is going to be the new normal. Among various verticals of industries adopting the latest technologies in order to stay put in unprecedented times, the banking industry is evolving faster today than ever before.

The Trigger of Digital Transformation

Uncertainty in business continuity, job loss, reduced salary incomes due to the pandemic created a significant financial impact on people; who turned to banks and financial institutions for managing their finances. The banks are working under pressure due to the pile of pending paperwork that has to be cleared on an urgent basis. Such an extensive overload urged many of the banks all over the world, to transform their operations with the help of the latest technologies.


Unlike other industries, banking too felt the urgency for digital transformation during the pandemic. Although banking mobile apps have been of great help in the lockdown as it allowed people to stay safe at home and carry out their banking needs, it still has some limitations. To eliminate that, banks are now preparing to embrace the next major phase of digital transformation i.e Automation since it is the only out-of-the-box thinking, disruptive technology, and near-flawless execution to beat the competitive environment of rising cost pressures, internet giants, fintech, Facebook, and other players. It is becoming a critical need for banks to take rapid action and respond to the needs of customers for which modernizing bank operations to support expanded digitization of both the front and back ends of their businesses is becoming a need of the hour.

What Exactly is Digital Transformation?

usecases-3 Digital Transformation is far beyond just transforming traditional banking into a digital world. Efficacious digital transformation is not just streamlining and fastening processes, in fact, it’s more about understanding digital customer behavior, preferences, choices, likes, dislikes, stated as well as unstated needs, aspirations etc. In short, it includes adopting an Agile development methodology that reforms an organization from being product-centric to customer-centric.


Why Banks and Financial Institutions Require Digital Transformation?

Banking today is more than just transactions. People are giving more importance to the experience they receive from the bank than its services. Unlike earlier, when people chose a bank nearer to them, digitalization has made it easy for customers to go for any bank whose services they like the most.

Robotics-in-Healthcare Moreover, due to the scare of contracting coronavirus while visiting a branch, people are switching to banking apps more for their transactions. Now traditionally, banks are spending most of their efforts, time and money on transaction execution, query answering and solving, which are nothing but a very basic feature of their overall service and are consuming very precious hours of the bank. There comes the need for digital transformation the most.

A bank having an omnichannel presence, mobile app, social media presence etc., gets customer attention easily than those without them. To add more, banks can provide a personalized customer experience by understanding a customer more than just doing the guesswork or suggesting them irrelevant offers. Digital Transformation helps banks to stay innovative, adaptive and cater to the demands of the new-age customers as per the market trends. In short, digital transformation is what can keep the bank from lagging.

Now since we have had enough discussion about digital transformation in the banking sector and the need for it, let us see what digital transformation do banks need to make.

1. Chatbots

Banking botsCustomers have one or the other banking query every second, and the majority of them are repetitive ones; answering each takes up a lot of useful hours for bank employees. Enter chatbots who are nothing but virtual personal assistants available round the clock, who take up the job of interacting with customers from welcoming them, attending their queries, suggesting offers up to providing the information.

Chatbots are not to replace humans but to help free daily routine tasks. They converse with customers in natural language using deep learning algorithms that translate conversations using a rule-based approach. A chatbot is an AI (Artificial Intelligence) software that can considerably reduce cost, save time, facilitate manual and repetitive tasks, and speed up the banking process; while giving an efficient and impressive customer experience.

2. Strong Digital Security

Needless to say, how vital security is to banking. With the amount of personal and confidential data a bank holds, online fraud and scam are the biggest fears for banks that are challenging to take care of. Moreover, with the increased use of digital ways of banking, cybercrime is also on the rise. Hence, it becomes necessary to implement AI-enabled security measures to avoid any such kind of online frauds.


AI-enhanced security is much-needed as it is nearly impossible to hack. It can alert bank systems to flag any suspicious transactions before their completion. It can identify fraud factors quickly and even support investigation teams in enhancing security with its fraud prevention tactics. Biometric authentication such as fingerprint, facial, iris, or voice scan is already prevalent in banking security systems, but with AI, it becomes even smarter. Since such scans can still be fooled, enabling AI in them will help eradicate every possible loophole because AI transforms the informative unique traits of a particular part of the body into codes or make them more complex but easy to understand by the system.

3. Robotic Process Automation

Software revolution is a must in banking due to plenty of paperwork. Doing it all manually is what dragging banks behind that later turns into a mass of work. While many have realized the importance of automation in banking and have embraced it in their system, there’s still a mile to go.


Banking work is mostly repetitive in nature which takes up a lot of manual efforts and as said before; in order to improve their operational efficiency, reduce manual efforts, offer better compliance, mitigate risks, and enhance the overall consumer experience, RPA-based banking robots must be enabled at any cost.

RPA Having software process bots take control over the banking process, a lot of laborious and time-consuming tasks like report generation, customer onboarding, credit card, loan, and mortgage processing, Know your customer (KYC) and Anti-Money laundering (AML), account opening and closure, customer service etc., can be streamlined, and employees can be freed for better and other crucial tasks. McKinsey predicts that in the next couple of years, the second wave of automation and AI can be seen where machines & software bots will execute 10% to 25% of tasks across a myriad of bank functions, expanding the overall capacity and allowing the workforce to focus on higher-value tasks and projects.

4. Employee Performance Monitoring

Cognitive Automation To pin down heavy workload; excellent work efficiency is required but, it is also the period when it becomes difficult to keep an eye on the staff's performance and manage them as well. Although tracking staff's productivity is often seen as a negative activity, it is extremely beneficial and important to understand the progress, delays, priorities, issues etc. of a bank. With banking bots, this activity can be carried out without any bias, smoothly, and efficiently. It is a win-win situation as neither employees will have any dispute with higher officials nor the higher ones have to deal with each employee as it will be all process bots monitoring.

5. Personalization, Planning & Prediction

Banking is more of an experience for customers which is why banks too are focusing more on providing an exceptional customer experience. Also, personalization is something people are expecting from any service, and a bank is no exception. This is the reason why banks are enabling AI into their system as AI understands customers and their behavior better and helps banks in customizing and personalizing everything from products, services, offers, to communication.


Next, comes planning. Banking bots can be of great help to customers in planning their finance. With AI keeping tabs on customer's behavior, investment, current income and expenditure, banking bots can guide customers to make intelligent, real-time investment decisions that can benefit them.

Last but not least, you will be surprised to know that AI along with RPA can help banks in predicting the future of customer's finance by analyzing past behaviors. After monitoring their spending and saving patterns, AI can even suggest investment options to customers that suit them the best.


Digital transformation in banking is not the future but the present as the need for smart solutions is becoming a necessity in the current circumstances. Since banks cannot risk errors, lags, tediousness in their processes, transforming their operations with a combination of intelligent agents, modern apps, machine learning, AI-enabled assistants and measures, is the only key to survive the urgency in the pandemic and the future ahead.