Digital Disruption In Banking Sector: Impacts And Analysis

Work-centered analysis of the bank before the digital disruption

Discuss about the Digital Disruption in Banking Sector.

The advancement of technology has its impact on various sectors. The application of technology is also considerable in case of banking sectors. The banks are aware of the changing of the technology and are eager to adopt the new technology in order to make the services more easily accessible to the users. It has been found out in a survey conducted by  Nordea that the increase of the uses availing the online and net banking facilities has grown up to 90% in 2014 (Oshodin et al. 2017). Figure shows that the demands of the users are changing. Using technology in the banking sector has made the services like switching between banks, making payment through bank easily available to the users in a cost and time effective way. The application of the digital innovations in the banking sector has made the business more competitive both for the technological companies and the banking organization (Curley and Salmelin  2018). This study will discuss the certain impacts of digitization in the banking sectors in order to do this, the impacts of the digital disruption in a particular bank is evaluated (Arnold  and Jeffery  2016). The comparison of the situation before the digital disruption in the bank and the situation after the digital disruption in the bank is done in order to make the recommendation and conclusion. In order to carry out the analysis more effectively, the work centered analysis is done on the particular bank. The challenges and the advantages that the bank can phase due to the digital innovation is also discussed in this study.

The innovations of technologies and their implementation on the banking sectors are bringing the significant change in the service systems of the banks. The use of technology in different sections of service such as making payment and other bank account related services has made the baking easier for the consumers (Lee  2015). These type services are known as net banking or e-services provided by the bank. These services are cost effective in nature, for both the consumer and the banking organization. Using technology is also making the service to be served accurately and taking the small time span.

There are six fundamental elements in the work process analysis.

• Customer
• Product
• Business Process
• Participants
• Information
• Technology

Customer: Customers used to withdraw or deposit the money to the bank account. The process is done manually. The customer had to go to the bank  and had to fulfill certain formalities for these services.

Retrospective analysis of the banking system before the digital disruption

Product: The bank checks all the fields in the forms submitted by the customers and proceed according to the requirements of the consumers.  The consumer can get the services after the verification and transaction process.

Business Process: Major activities of the bank:

• Handling and managing the consumer’s account.
• Doing the transaction.
• Deposition of cash.
• Update the balance of the account.
• Closing of the customer’s account.
• Printing of confirmation.
• Opening the new bank account for the new customer.

Participants: The participants in the whole business process are the customers of the bank and the employees of the bank. The services were demanded by the consumers and the employees did the proceeding according to the demand of the customer (Ibegbulem  and Andersson  2017). The whole process did not stand in the absence of any one participant.

Information: During the course of the business process, exchanging of information did happen in a large scale. The information is sensitive in nature ads it holds the personal details along with the account information of the consumers.

Technology used by the bank: There was little use of technology in the process. The requests for services, made by the customers were initially processed by the bank employees in a manual way. The use of technology did used for doing certain things like maintaining the record of the accounts of the consumer along with the customer database, checking the amount of  balance in particular account and counting the currency (Walker  2014). The storage was mainly server based storage.

The banking system before the digital disruption was heavily based on the manpower. The processing of the forms submitted by the consumers for availing the service was processed manually by the employees of the bank. There was a chance that a mistake may occur during the course of verification. It has been found that such mistakes did happen and it had a large impact on both the account holder and the bank. The processing was based on the manpower, so, it used to take much time to process. Thee consumers had to go to the bank for availing the service, which could sometimes become impossible for them (Dermine  2017). The whole system was doing well but there were lots of scope for the improvement of the banking system (Tornjanski et al. 2015). At that time the main challenge for the bank was to introduce a error free service to the consumers and easy detection of the frauds.

Customers: The customers deposit, withdrawals the money from the bank. The consumers can avail these services after going to the bank or they can avail the service through the internet. All services are available through internet, so that the consumers of the bank can avail services without going to the bank.

Analysis of the new process after the digital disruption

Products: The products or the services are made available in both online and offline mode.  In case of the offline service the consumer has to go to the bank and avail the services in conventional way. In order to avail the services online, the consumer has to access the portal of the bank through internet. The user has to give the right information including the bank account number and the user id number in the portal to avail the services (Bughin 2017). The bank has implemented another way for withdrawal of the cash. The money can be drawn using the ATM of the bank, for that the user needs to have a ATM card and confidential and secured PIN number.

The bank has created a dedicated portal where the user can login using their user id and can access all the services of the bank (Agrawal  2017). The portal is connected to the server of the bank. The user activity can be monitored by the bank officials. However, getting the online facility, the consumer needs to go through some paper work for one time.

In case of offline process, the user has to go to the bank and has to do formal enquiry regarding the services and fill up the forms accordingly. The employees of the bank then process those request manually.

Information: The information used in this system are confidential as , it holds the information regarding the customers and their account numbers. In case of online banking and the use of ATM the user id and the Pin of individual user is important.

Technology: The bank has implemented different advanced technology to initiate the online banking. The bank has taken a policy to migrate the storage system partially to the cloud. This will help to save the cost and the will provide better storage system (Omarini 2017). The bank has also implemented the ATM system where, the ATM server is connected with the bank and the transactions made through the ATM will be observed by the bank.

The banks have seen certain advantages after the implementation of new technology.

• Customer satisfaction: The customers are satisfied with the banking experience. They can avail service through online banking which saves their time and makes their banking experience better. Moreover, from the ATM they can withdrawals the money during any time of the day.
• Cost effectiveness and better use of resources: The use of the technology in the banking sector enables the fair use of resources and the online banking helps to reduce the cost overhead. It indirectly helps in the growth of the business of the bank.
• Better security: The adaptation of the technology in the banking system reduces the risk of mistakes those could be happen in case of manual processing (Hunter, dela and Dole 2016).  The works can be done in a small time span using the technologies.
• Transparency in the process: The use of the technology has made the whole banking system clear and transparent.
• Availability of service: The technology has made the banking system available for 24*7 hours. The consumers can avail services through internet at any time of the day.

There are certain advantages of the digital disruption have been concluded from the discussion. However, it can be assumed that the banking system has partially adopted the use of technology. In order for the full digitization of the banking system certain steps are needed to be taken care of. This are-

• The awareness regarding the online banking among the consumers.
• The security system of the transactions through online is needed to be improved.
• The bank should think to migrate the data fully to the cloud.
• The bank can recruit a team of dedicated IT experts to maintain the whole system.

The migration of data to cloud can be done after taking advice to the cloud security experts. They can ensure the implementation of the whole system along with maintaining the security. The awareness among the uses can be done through providing the guidelines among the users. In order to implement the fully digitized system the company can take advice of the external consultants.

Conclusion

It can be concluded from the paper that the digital disruptions in the banking system can be helpful for improvisation of the services. In order to develop the proper implementation of the digitization of the banking system, the work centered analysis of the current infrastructure is needed to be done. This analysis can help to understand the different components of the existing system. The work centered analysis of the infrastructure after the digital disruption is done in order to know the improvement. For further improvement, the recommendations are made. It can be said proper implementation of digitization will deliver positive result in this sector.

References

Agrawal, R., 2017. Disruption in Banking in Emerging Market Economy: An Empirical Study of India. Economic Analysis, 50(3-4), pp.20-31.

Arnold, D. and Jeffery, P., 2016. 5 The digital disruption of banking and payment services. Research Handbook on Digital Transformations, p.103.

Bughin, J., 2017. The best response to digital disruption. MIT Sloan Management Review, 58(4).

Curley, M. and Salmelin, B., 2018. Digital Disruption. In Open Innovation 2.0 (pp. 15-25). Springer, Cham.

Dermine, J., 2017. Digital Disruption and Bank Lending. European Economy, (2), pp.63-76.

Hunter, S., dela Cruz, V. and Dole, D., 2016. Financial Inclusion in the Digital Age.

Ibegbulem, A. and Andersson, G., 2017. Managing Customer Loyalty in the Digital Era of the Banking Industry.

Lee, D.K.C., 2015. On the edge of disruption.

Omarini, A., 2017. The Digital Transformation in Banking and The Role of FinTechs in the New Financial Intermediation Scenario. internationl journal of trade, economics, and finance, 1(1), pp.1-6.

Oshodin, O., Molla, A., Karanasios, S. and Ong, C.E., 2017. Is FinTech a Disruption or a New Eco-system? An Exploratory Investigation of Banksr Response to FinTech in Australia. In Proceeding of Australasian Conference on Information Systems (pp. 1-11).

Tornjanski, V., Marinkovi?, S., S?voiu, G. and ?udanov, M., 2015. A Need for Research Focus Shift: Banking Industry in the Age of Digital Disruption. Econophysics, Sociophysics & Other Multidisciplinary Sciences Journal (ESMSJ), 5(3), pp.11-15.

Walker, A., 2014. Banking without banks: Exploring the disruptive effects of converging technologies that will shape the future of banking. Journal of Securities Operations & Custody, 7(1), pp.69-80.