Traditional Bank such as JP Morgan,Bank of Nova Scotia ,Citigroup, ING bank NV Once in a very comfortable driving seat of financial institutions are now in the verge of Bankruptcy. Are they too late in their Digital Transformation Journey ?
They were completely ignorant of the fact that there might be poachers in the form of fintech startups who were knocking at their door ready to dethrone.
When Bitcoin was introduced in 2008 most of these financial institutions were almost disregarding their own need to change.
- Now there are 100 million bitcoin owners
- 400,000 daily bitcoin users
- 53 million bitcoin traders
This is just an example of BitCoin. There are a lot of other digital currencies who are also trying to establish their mark in the financial industry.
What does that really say about traditional banks ?
They never felt the urgency to change or felt the need to innovate in the way customer service was offered.
After several years of inception of innovative fin-tech companies, they did realize and wanted to improve their own service offerings by providing more digital services. However they were only focusing on complementary services on top of what customers were already receiving.
In the meanwhile companies like Solaris bank, Offers a completely digital banking-as-a-service platform to which other businesses can connect in order to offer financial services themselves.
Which is a breath of fresh air in terms of how the banking industry is changing as far as offering is concerned. Also platforms like Solaris Bank can offer companies a fast track to Digital Transformation.
Again,British financial technology company Revolut offers banking services including GBP and EUR bank accounts, a prepaid debit card, fee-free currency exchange, stock trading,
On the contrary ING (Currently on financial distress) spent over 800 million euros on digital transformation and failed to really validate the assumptions around making the organization more efficient. There could be many reasons contributing to the issues, one of them perhaps not being able to solve the fundamental problems of customers.
A simple example is that ING sent an email campaign and requested users to signup for new offerings. When the user clicked on the link received they were directed to a page which was not compatible with mobile devices. Based on the form received how do you expect the customers to fill the form on their mobile devices. And how much of Digital Transformation is going on ?
When does financial distress happen ?
Financial distress happens when a company or individual cannot generate revenue or income and can’t meet or pay its financial obligations. Financial distress is usually the last step before bankruptcy.
There are indicators that suggest more and more traditional financial institutions are playing a catching up game in their efforts to improve Digital Transformation efforts and remain relevant. Based on the speed at which the financial spectrum is changing perhaps they are far too late to show reactions and adapt.
Digital Transformation is not just another initiative that keeps the employee busy. Or its not just another project that the line managers wants to do because he/she has some marketing budget which he/she wants to spend on. And if they don’t spend the money then they are not going to receive it in the following year. But its a lifeline that traditional bank like many other institutions are desperately looking to embark upon.
If change doesn’t happen in the way the customers are served with the challenging environment we are into, then it would be no time before we wont have any customers to serve. Challenging time demand radical change in our mindset to serve our customers. A lot of institutions are already have a major step towards it.