In the space of two decades, the banking sector has had to deal with the arrival of a huge tsunami: the Internet and new technologies.
The democratisation of mobile telephony and internet access has inexorably shaken the banking world, which is not known for its flexibility either in customer relations or in its own back office.
The arrival of online banks, among others, has forced these large companies to begin their digital transformation sine qua non. The sector is currently tending towards a certain equilibrium as the major traditional banks open up dematerialised services or take over existing online banks.
But while banks have largely succeeded in meeting these new challenges, others await them as the world of digitalisation is not about to end. In parallel with the new ways of conceiving the banking profession, a question arises: why continue to go to a bank branch?
A successful digital revolution
Despite their somewhat “old-fashioned” image, banks are often at the cutting edge of new economic practices. The arrival of digitisation has been handled rather well. While it facilitated the relationship between bankers and customers, it was mainly used for the internal tasks of a bank.
Little by little, new solutions have appeared in the back office or even at a more global level, such as the globalisation of exchanges and their automation.
Software and computers have invaded the banking space but also the public space, with the introduction of the famous ATMs. We have seen them flourish in the cities but also in some villages. But, as a sign of the times, some are being removed.
For while digitisation and new technologies have been welcome tools for bankers, the arrival of digitalisation has been a real kick in the pants.
The upheaval of digitalisation
The arrival of the Internet has been rather well received by the banks, which are mainly interested in the reduction of interbank exchanges but also in the access to real time information such as international stock exchanges, exchange rates, etc.
However, what many did not anticipate was the democratisation of the mobile internet which would give rise to hyper-competitive online banks.
On the one hand, we have a public’s appetite for 100% digital.
Nowadays almost everyone does a search on the internet before buying. As for the purchases themselves on the web, their volume increases every year. While some banks were investing in these virtual shops, they did not necessarily realise that their own business domain could be dematerialised. Who could have said just 10 years ago that one day you could open a bank account in a few minutes in a tobacco shop?
On the other hand, we have attractive bank conditions. Mobile banks have arrived on the market with two considerable advantages: they are completely in tune with the new technology needs of an increasingly connected public, and they offer banking fees, which are often criticised in the traditional system, close to zero.
This is because dematerialised banks no longer need to have a physical establishment or branch in every canton and every major city. Not to mention, of course, the costs involved in using them and hiring reception, protection and security staff. As a result, operating expenses are kept to a minimum, resulting in minimal bank charges. You can now have an account with a credit card for a minimal investment.
In addition, dematerialised banks make it possible to carry out all traditional operations from anywhere, from a smartphone or tablet, at any time. Finally, some online banking services offer a simple way to pay with your smartphone.
This nomadism has also delighted professionals in multiple sectors who can manage their entire company in a dematerialised manner.
Traditional banks had to react quickly to this unexpected competition. The vast majority of banks have now integrated a dematerialised subsidiary into their offer.
Competition from these new financial institutions has had another unexpected consequence: customer volatility. Banks must therefore not only propose dematerialised offers, but also and above all, like any company selling services or goods, integrate the user experience into their thinking.
However, beyond basic banking services, a whole world is affected by this digital revolution. We have seen the emergence on the market of banking organisations that are a little different, happily combining finance and technology: the famous Fintech.
These entities are not always banks per se. The term “financial start-up” can be used more generally to define what Fintech is. These companies often develop around a well-established strategy: specialising in a very specific or even hyper-precise sector of the banking world.
In B2C, there are the famous 100% digital banks with free credit cards and low fees. But we should also note new ways of financing a project with the arrival of collaborative and/or cooperative financing platforms which can give a helping hand to a budding business or even support an artist.
There are also applications for online payment, dematerialised asset management or the automation and analysis of current investments.
Online currency transfer can be found in the B2B world. But here too, specialisation has seen the emergence of new practices on old financing techniques such as factoring. Formerly used to alleviate financial difficulties, factoring leaves the management of advance financing to a credit organisation.
We can also talk about Insurtech or digital insurance which can also be collaborative. Regtech analyses the adequacy of the movements of companies in the international banking sector with the various regulations.
This explosion of new tools and organisations is now relatively subsiding. The market is shrinking as most of the big banks are either investing in fintech internally or buying up specialist start-ups to get their know-how, technology and customers.
However, the digital transformation has also changed the internal functioning of banks.
Digitalisation, digitalisation, automation and Big Data analysis have also gradually made their appearance internally, often with some difficulty. Indeed, unlike banking institutions born in a 100% digital environment, successful digital transformation requires efforts and often large investments for old companies.
Because digitalisation leads to changes in internal management. The sectorisation of services is reduced, management becomes transversal. There is a paradigm shift in corporate culture with a less pyramidal vision and increased employee cohesion. Often this new and agile perception can clash with ways of working that have become either obsolete or inefficient.
This is where audit companies like ours come in to analyse the digital past, optimise the digital present and anticipate the future. Because new technologies are always evolving and between the emergence of virtual currencies and the massive arrival of blockchain technology, the banking sector is still facing challenges.