Banks will rethink banking from the ground-up as part of Banking 4.0 since customers’ level of expectations has become the new disruptor in the conventional economy. This will impact how banks connect with consumers and how they handle conventional bank products, procedures, and finance and risk operations.

Innovative technology and talent must be implemented to compete in the digital era. This generation of banks will serve as a platform for digital services including a broad variety of banking and nonbanking activities.

Banks will evolve from being safe havens for people’s assets to financial partners capable of making tailored suggestions based on their clients’ financial histories, experiences, and preferences, as well as clearinghouses for a variety of partner services.

The strategic priorities for the banking sectors include; 
  • Seamless Connectivity
  • Data-Driven Intelligence
  • Operational Effectiveness
  • Financial Insights and Risk Control

In this blog, we will look at the strategic importance and benefits obtained by the banking sector through the implementation of Operational Effectiveness,

Let us start by understanding what seamless connectivity is, and there we get our first question’s answer,

What does “Operational Effectiveness” mean?

Banks must provide customers-focused goods, services, and experiences made possible by a 360-degree client view of banking activities that are streamlined, automated, and seamlessly integrated systems for finance, risk, and compliance in retail and commercial banking organizations.

The banks may decrease inefficiencies and foresee possibilities to foster loyalty, prevent churn out, and maximize profits by leveraging customer and employee data. Banks ought to start putting more money into the tools and abilities required to interact with customers through their chosen platforms and channels, to use and manage O-data and X-data, banks will implement machine learning and AI technologies.

Banks can increase staff productivity and use employees’ talents and skills for higher-value, revenue-generating work by automating low-value, human-based processes like trade reconciliation, transaction matching, and ledger adjustment.

Impact of “Operational Effectiveness” in the Banking Sector:

Let us investigate two different scenarios, one following the traditional finance service network and the other following the next-gen practices of the digital era,

Assume that XYZ bank is focusing launch a new end application to streamline financial transactions and consumer e-commerce embedded applications for their customers, undoubtedly the requirement to build such an application is the cleansed integrated data, it is the foundation to learn and build an effective algorithm and customize to develop a user-friendly application. Well, it is now the time to investigate the setbacks of using traditional practices and how it is overcome by next-gen practices.

Scenario 1:
  • A major issue arises with the integration of data accumulated across the varied departments; lack of integrity causes flaws since you do not calculate the sum up of values across varied aspects.
  • Limited or nonexistent aggregate views of customer interactions across channels and products make customers-intent predictions and therefore, capital needs are difficult or impossible.
  • Prevents your innovations to focus on customer or employee centricity, thereby the product developed does not satisfy the customer and employee requirements.
Scenario 2:
  • The data is integrated end-to-end across the departments, to provide clear analytics.
  • Provides you with an equalized mindshare and develops a fully integrated customer-centric or employee-centric product.
  • Most of the activities are automated, thereby reducing the possibilities of errors and risk.
  • Highly improved user experience and revenue.
Outcome-Driven Values of Operational Effectiveness:
  • Faster time to market
  • Lowers R&D costs
  • Increased revenue
  • Improves customer experience
  • Eliminates fraud and risk-involved activities to the maximum
Benefits of having Operational Effectiveness in the Banking Industry:
  • Utilize a 360-degree customer vision to provide customer-centric goods and services.
  • Develop a system that seamlessly integrates compliance, risk, and finance across retail and commercial banking operations.
  • A digital foundation that permits only one source of truth allows for innovation to be flexible and adapt to new business models, regulations, and business events like mergers and acquisitions.
  • Flexible pricing model adaption, increased robustness, and quick reaction to erratic market conditions
  • Price Transparency
To Conclude:

Customers want their banks to give an experience comparable to that provided by their retail and social media interactions in the experience economy. Banks are reacting with new goods and services that appear, behave, and feel seamless.

These new goods and services influence all aspects of the company, not just the front office. Banks must address E2E procedures across departments and lines of business (Lobs) to provide better customer experiences, goods, and services.

Banks must recruit, develop, and retain consumers by providing an integrated, multichannel environment. To flourish in the digital era, they must adapt to evaluate each customer’s behavior and point of view.