Digital transformation in banking is changing the industry beyond recognition. But the services we are seeing and using now are just the beginning.

In 1967, a branch of Barclays Bank in England launched the first ATM. The machine allowed customers to withdraw £10 at a time – around £150 (Dhs757) inflation-adjusted. Before this, if you wanted money for the weekend, you had to go into the branch and fill out paperwork to make a withdrawal. If you forgot, then your wallet stayed empty until the bank opened again on Monday morning. The ATM meant you could access your money 24-hours a day.

Then in the mid-1990s, we saw the launch of internet banking and that changed how we access bank services. Digital transformation was truly starting, but now we are in a new period of rapid change.

Banking digital transformation

Digital transformation is experiencing a second major wave, and it’s having an even bigger impact as it revolutionises the banking industry.

The idea of going into a branch of your bank for services is increasingly an antiquated notion. As a result, branches are closing, and since the beginning of 2020, 96 bank branches have closed in the UAE alone. In 2019 Mashreq Bank announced it was to close half of its banks in the UAE and would spend Dhs500 million over the next five years on digitisation. Emirates NBD announced it was spending more than Dhs1 billion on digitisation. Other banks are doing similar, and from the websites that started the digital transformation in the mid-1990s, we are now seeing a migration to smartphones.

According to Insider Intelligence’s Mobile Banking Competitive Edge Study, 89 per cent of respondents said they use a mobile banking service. That figure climbs to a near-complete 97 per cent for Millennials, but it’s something that all age groups are largely embracing, with 91 per cent of Gen Xers and 79 per cent of Baby Boomers interacting via mobile.

In 2019, smartphone technology was significantly enhanced by the use of artificial intelligence-based apps and IoT integrations. This is now reflected in the banking industry trends we see today.

Transferring money from one account to another or paying a bill via a phone app is commonplace. We’re now able to deposit a cheque by taking a picture of it but cheques are becoming a thing of the past anyway. The technology is continually evolving, eliminating old processes, and the digital experience is simplifying and speeding up everyday tasks. 

Fingerprint recognition on mobile phones means access to banking services no longer requires logins or passwords. Physical items like the secure key tokens used to generate a code number are becoming redundant. But there is still a long way to go.

Banking digital transformation growth

A study from Cornerstone Advisors found that only about a quarter of banks had begun their digital transformation strategy before 2019, and 45 per cent were yet to launch a strategy before this year.

This means there is still scope for much more digital integration, and once that happens, we’ll see a rapid improvement of the existing services.

For example, we can expect to see smarter and more intuitive chatbots as artificial intelligence improves and banks adopt this. While a CGS survey indicated that 86 per cent of consumers prefer to interact with a human agent, this is large because current chatbots are only able to answer basic questions. As the AI improves – and access to a human on the phone become harder amid increased automation – so it will become second nature to accept forms of digital transformation as the norm.

When you consider that a PwC survey revealed that 84 per cent of businesses say implementing AI “at scale” in their organisations is necessary for them to be successful over the next three years. It’s clear we’re still near the start of the digital transformation process, despite the huge changes we’ve already seen.

Digital transformation through mobile

GSMA Intelligence estimates that today there are around 5.22 billion mobile users worldwide. Banking via mobile is increasingly the norm, although mobile wallets, blockchain technology and cryptocurrency are still in their early stages with huge scope for expansion.

Digital transformation is having a disruptive impact on nearly every industry as the public expects services to be available as a digital option, usually via an app on their phone. From ordering food or transport to banking and shopping, digitalisation will continue to transform how we live our lives. 

At with our collect service we are enabling people via a mobile app, to collect or dispose of heavy, bulky items from one location to another. Soon we’ll be launching market which will work as a virtual marketplace for business-to-business buying and selling of recovered commodities such as scrap metal, recyclable plastic, mixed fibres, all via a real-time interface. Given that most services like this are moving to apps, it’s natural that the banking sector migrates with them. It’s simply following the old maxim, “meet your customers where they are” and that’s increasingly on their smartphones. Digitalisation is now top of the agenda for banks across the world and digital transformation is inevitable.