###### Codelantic

**Banking Ecosystem: The Impact Of Digitalisation In The Banking Sector**

December 25, 2021

Digital innovations have
revolutionised governance, agriculture, education and enterprises in
ways that were once unimaginable. The financial sector is another area
that has seen significant improvements with digitalisation and the
banking industry in particular has benefited greatly from
digitalisation.

With
digitalisation, banks have been able to introduce innovative products
and services and new business models, automate and optimise processes,
improve value chain, and speed up the adoption of technologies.

These are some of the key areas of banking that have been impacted by digitisation.

#### Innovative products and services

Digital
banking is a concept that has come with digitalisation in the banking
sector and banking app development has made banking a simple and
convenient task. Accessing an account, transferring cash and making
payments have been made so much easier through mobile apps.

An
account holder no longer needs to visit a physical bank and waste time
in queues or fill form after form as banks have now simplified these
time-consuming processes with mobile banking application development.

In
addition to mobile banking, video chat advisory, product
personalisation, and online finance tools have also been introduced with
digitalisation in the banking sector.

Non-fungible
tokens or NFTs are perhaps one of the most innovative technologies
introduced with digitalisation in the banking sector, with our
perception of what amounts to currency changing entirely.

However,
digital innovations have not revolutionised banking for consumers only.
The way banks function and how banking services are carried out has
been made more efficient with the use of innovative products and
services.

Cloud computing,
big data and analytics, data encryption, and blockchain are other
technologies that have optimised banking processes and strengthened
security.

#### Business models

Banking
relied entirely on brick and mortar establishments for a long time, but
this has changed with digitalisation. Today, there are banking channels
that are entirely digital, eliminating the need for brick and mortar
establishments. Pure digital banking has virtual products and services
and utilises mobile and other digital platforms to offer consumers a
complete banking experience.

Payments
bank is another business model worth making a note of. Payment banks
cannot issue loans or credit cards and typically accept a restricted
deposit. This business model promotes financial inclusion and is ideal
for bill payments and remittances.

A
third business model that has been impacted by digitisation in the
banking sector is customer-centric banking, where digital innovations
and technologies are used to personalise products and services, provide
an omni-channel experience to customers, and improve customer
acquisition and retention strategies with the use of data analytics.

Pure
digital, customer-centric, and payments banks are business models that
have been impacted greatly by digitalisation in the banking sector and
innovative digital technologies have made it possible to explore these
models, whether as a hybrid model or an entirely new system.

#### **Automated processes**

Accessing
banking services and processes is seen as a time-consuming process
mainly due to the amount of functions that need to be done manually.
However, some of these processes can be automated to save customer time
as well as increase employee productivity.

A [software development company](/content/site-root.html),
for instance, can design apps and software to streamline and automate
processes in the banking sector in order to optimise operations and
increase efficiency. With the right tools and technology, processes can
be simplified, digitalised, and automated to improve customer
experience.

Banks can also take it a step further by monitoring processes and optimising them even further.

#### **Impact of digitalisation on value chain**

If
the banking sector wants to adapt to new technologies and enjoy the
benefits of digitalisation, financial institutions must support
digitalisation across the organisation. Failing to do so may cause value
chain disruptions with only some activities being supported by
digitalisation.

A few key
value chain activities to consider are IT infrastructure of the bank,
banking services operations, marketing and sales, human resources, and
procurement. Digital innovations supporting these activities can
minimise business process disruption and increase efficiency and
optimisation across the organisation.

Looking at the [**banking ecosystem**](/content/ecosystem/banking-ecosystem/index.html),
it is thus clear that the impact of digitalisation in the banking
sector is significant but also positive. This is why it is important
that financial institutions embrace and adapt digital innovations to
optimise operations and improve customer experience.

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