The financial sector is already modernizing with the latest technological developments, yet traditional banks are struggling to keep up with the times. They still have a lot of work to do: not only to stay ahead of this new competition but also to remain viable in the future. Saket Gulati from Cognizant highlights three ways in which the traditional bank can become a modern and future-proof company.
1. Invest in digital transformation
The Future Ready Business research shows that the financial sector ranks fifth out of eight in terms of future readiness. This is not surprising, as traditional banks have faced their digital lag in recent years – but it is concerning. Now that new players are active in the sector, the urgency for digital transformation is even greater. Fortunately, we don't have to fear only the new fintech companies. Traditional banks can also learn from how these companies enhance the digital experience for customers, or how they improve the experience for employees with digital workplaces. For example, ABN AMRO is already accelerating its digital transformation towards a global cloud-based IT landscape.
Digital transformation requires a lot of time, customization, and good internal collaboration, but the benefits are clear. Modern banks see increased operational effectiveness and employee satisfaction, significant cost reduction, and a shorter time-to-market through artificial intelligence (AI) and automation.
2. Stimulate sustainable business practices internally and externally
Sustainability is essential to being a modern company today, according to over 87 percent of financial institutions. Yet less than half of banks engage in sustainability activities, even though they must report their ESG data.
Moreover, banks must also encourage partners and customers to actively engage in achieving ESG goals. From assessing the sustainability impact of loans and investments to urging customers to use greener products, traditional banks need to do more to achieve their ESG objectives. This is also where fintechs make a difference; they are more customer-oriented and speak out on issues like sustainability, which also helps them attract new talent.
3. Respond to the wishes and needs of (new) talent
Motivated and satisfied employees have the power to make a company future-oriented, but the financial sector also struggles to retain staff and attract new talent. The sector particularly falls short in terms of diversity, inclusivity, and attention to sustainability. Additionally, it appears that more than half of employees have higher satisfaction when the employer encourages the use of technology. It is time for traditional banks to learn from fintechs: they need to better understand their current and potential talents and actively respond to this. A successful business operation is, after all, impossible without motivated people.
Traditional ways of working are no longer rewarding
Organizations in the financial sector are surprisingly resilient. According to the Future Ready Business research, ninety percent of surveyed employees indicate that their company could continue to function in the event of significant IT disruptions. However, the IT infrastructure of these companies must go beyond merely functioning in emergencies.
The traditional way of working was previously rewarding, but today traditional banks are not equipped to handle the rapidly changing world. From increasing competition to unforeseen external circumstances: banks must change their approach. In this new world, ESG is a priority, technology plays an overarching role, and talent can make all the difference. Progress in all these areas is necessary for traditional banks to remain stable, resilient, and competitive in the future.
