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Digitalization has affected people around the world in some way or the other. With the advent of new technologies every day, the time and effort required for completing tasks have been reduced drastically. In the financial space, digital progress has been witnessed for many years. 

Introduction of online banking, mobile banking was the baby steps towards a digitally sound economic arena. Digitalization is essential to improve the overall customer experience. It also helps enhances financial inclusion as digitalization improves the TAT and the rate of conversion! 

How can digital transformation improvise the finance and banking sector?

A digitally improved financial space can help better services where the customers need not wait in queues for hours. Then the security is enhanced as you can transact online and not carry a massive amount of cash in your pockets. In the financial space, especially in the banking sector, the number of employees was too less to handle the customers within the stipulated time. 

However, with digitalization, banks, financial corporations, and NBFCs reduced the number of walk-ins in a year as most customers, especially in urban and sub-urban areas, opt for digital services rather than visiting the branch offices. This is evident from this report published by RBI * that digital payments grew by 30.19% in March 2021. 

Another report suggests that* :

• Around 5.47 lakh crore of UPI transactions took place in India in June 2021. It is 11.6% above the number of transactions in the previous months, i.e., May 2021.

• In May 2021, 4.91 lakh crores of UPI transactions took place. This steep surge in UPI transactions and digital payments suggests the country is accepting digitalization and progressing towards a cashless society.  

With digitization and financial inclusion going hand-in-hand, the banks are slowly moving from their brick-and-mortar traditional banking to digital platforms; Neobanks have stepped in with a step ahead. They are a digital-only banking solution with a futuristic approach.
The final advancement in the security perspective is the introduction of blockchain in the financial services industry, wherein the blockchain database is used to record information that cannot be hacked. It has not only improved the safety aspect, but also TAT, scalability, and transparency without trust and performance.

Why is digital transformation the need of the hour?

Digitally progressed financial space can help in achieving the following – 

• It can help in gaining the trust of more customers. As most things are very transparent in digital transactions, the customers gain faith in the banking and financial services. 

• For financial companies and banks, it is easier to acquire new clients and customers. By spreading proper financial awareness via the internet, banks and financial corporations can quickly get customers who need these services. The gap between these two was the awareness and trust factor, which can be gained via digitalization. This is also a cheaper way of getting more business for the banks. 

• With Artificial Intelligence, now financial services are more personalized. This helps both the customers and the financial service provider. The customers get customized services as per their requirements, while the financial organization can increase the conversion rate by providing those personalized services. 

As per a report* published by Deloitte, by 2025, most of the transactions in the financial space are going to be online, touchless, as AI is going to dig deeper into this space. Self-service will be the new norm in this financial arena.