The majority of global business leaders today acknowledge the need for their organization to digitally transform. However, prior to embarking on efforts to create a digitally enabled organization, business leaders need to have a nuanced view of what digital transformation means for their business. In essence, Digital transformation is the process of using innovative technologies to alter business processes and tools, meet changing market requirements and enhance customer experiences. In the banking space, digital transformation can range from simple automation of repeatable tasks such as validating signatures to a complete digital overhaul of the business model across loan sales, operations and customer services. As new technologies mature and benefits become palpable, banks are slowly but steadily embracing them. This is in part due to new age competitors such as fintech startups and tech giants like Amazon & Google, who have entered the financial market and have re-emphasized the need for banks to stay on top of the latest technologies or lose market share. In fact, a recent study showed that 90% of all banking leaders across the globe envisage a digitally transformed industry in the next 5 years.
Envisage a digitally transformed
industry in 5 years
Consider strategic Procurement
to be critical for optimized
digital transformation costs
Digital transformation can sometimes be considered as a disjointed effort to modernize existing processes and tools, but to derive its true benefits, it needs to be intimately tied to a company’s strategic vision. Banks must view digital transformation as an innovative business model that is focused on customer needs, connected products and services, emerging technologies and real-time data. Banks need to come up with a comprehensive digital transformation strategy as fintech companies and other non-traditional financiers continue to gain more popularity and diminish banks’ profitability.
Digital tools and
processes to ensure seamless
communication between the front
office, middle office & back office.
Repeatable tasks are automated so
that the workforce can focus on
more value adding tasks
Core Systems -
Often the first to
get digitalized, advanced core
banking systems offer real-time
transaction management and
integrated customer management
solutions which are consistent
across the globe
External Systems -
integration with third party tools
and resources used by the bank
helps reduce turnaround time,
ensures data consistency and
increase customer satisfaction
A unified digital banking experience for customers
ensures they are always connected
to the bank and all their banking
needs can be delivered as a one
THE ROLE OF PROCUREMENT
Digital transformation can provide tangible benefits in reducing costs, increasing efficiency in the loans underwriting and servicing process and improving overall customer satisfaction. However, digital transformation can lead to a surge in capital expenditure along with increased future IT maintenance & support costs, consistent with increased consumption of digital technologies. If the market changes or cost pressures increase, some banks may find it difficult to sustain this transformation. It is therefore important to optimize costs and the effectiveness of a digital transformation program to realize its maximum potential.
Strategic Procurement processes can help banks contain one time and ongoing costs associated with digital transformation. It is advisable that banks include procurement in the core team responsible to drive digital transformation within the organization. If procurement is involved in the transformation journey from the beginning, it would not only help in reducing transformation costs but would also help in identifying the most suitable partners that can play a key role in driving success.
Here are the major benefits that can be driven by an effective procurement strategy for a digital transformation program at a bank:
Digital Transformation is a strategic initiative which requires considerable investments from the bank. Strategic Procurement processes can help the bank in optimizing both the initial investments and subsequent maintenance costs.
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optimize their digital transformation efforts