Digital Transformation of the World Economy

Digital Transformation in Banking

The basis of any economic transformation is changes, the key aspect of which is a change in the approach to doing business. In the 21st century, technology has become an integral part of the development of the state and society; thus, digital transformations penetrate deeper and deeper into the everyday life of humanity and into all spheres of their activity. 

The concept of “digital transformation” is based on radical changes in technological processes that are observed in all areas (economics, science, education and everyday life) and lead to a change and simplification of the information needs of economic agents. In the digital economy, all financial and economic phenomena are of an informational nature.

Digitalization of the economy and investment in intellectual capital are becoming the most important factors of economic growth in the world. These factors: 

  • have a primary impact on economic growth, 
  • increase efficiency in various areas of industrial production, 
  • contribute to the emergence of new markets and activities, 
  • ensure stable development, primarily, of the economic system of the state
  • facilitate creation of a new financial and technological ecosystem

Currently, digital transformation in banking is considered as an integral element of maintaining their competitiveness: on average, a third of banking operations are already carried out using digital technology. Revolutionary FinTech software solutions and innovations occur both in the interaction between businesses (B2B) and in the interactions of B2C, B2G and the provision of public services by banks.

The widespread adoption of digital technology is associated with the needs of society and the advantages achieved through the use of technology in the banking sector.

Unlocking the Outcomes of Digital Transformation in Banking

Digital Transformation in Banking

As a result of the emergence of a developed IT infrastructure and a shift in consumption from material goods to the consumption of digital goods, society is moving from demonstrative personal consumption of material goods to the demonstrative production of publicly available digital goods. 

Thus, the classical schemes of commodity production, markets, labor relations, and even the creation of social hierarchies, cease to meet the realities of information and digital structures and will be replaced by new forms of relations and institutions.

Currently, the financial system is in the process of development in accordance with the modern requirements of the digital economy. Due to digital transformation, business models and concepts for the development of the banking sector are being improved: from the advent of Internet banking to the transformation of traditional money transactions. 

Innovative development is the main opportunity for sustainable and long-term growth in the effectiveness of banks. In the coming decades, the digital development of the financial sector will accelerate. For the sound management of digital transformation in the banking sector consider:

  • The goal. The digital transformation of banks and IT consulting in banking is primarily aimed at a better understanding of the needs of customers: the population and organizations. Implementation of a rational digital transformation strategy will allow individual banks, and subsequently, the entire banking sector, to increase their efficiency and enter a new stage in the development of the banking system and the economy as a whole.
  • The process. The process of digital transformation should be based on a digital strategy, developed taking into account the characteristics and needs of a particular bank. 

IT Technologies Disrupting Banking Sector

IT Technologies Disrupting Banking Sector

Digital transformation implies the widespread introduction of modern methods of providing banking services through the use of novel technologies. Over the past decade, the following Fintech IT solutions have been developed in commercial banks:

  1. The development of Big Data technology helps to reduce the time for analysis of the creditworthiness of customers as well as to monitor compliance with laws and requirements.
  2. Cloud computing is a tool that helps to process and classify incoming data.
  3. The Internet of Things allows individual services which, in turn, helps to expand the customer base of a commercial bank and increase customer loyalty to a particular brand.
  4. Blockchain technology is at the core of the digital economy. Blockchain features determine the main property of cryptocurrencies – reliability, the impossibility of falsification and theft. In addition, the characteristics of cryptocurrencies include open-source software, the absence of the need for external regulation and a single emission center, cross-border nature, as well as ease of use and minimal transaction costs.
  5. Electronic payment systems, mobile payments, and electronic wallets are widely used in various areas of people’s lives. Maintaining stable operation and a high level of reliability of electronic payment systems (including mobile applications of the Internet banking system and SMS banking) allows commercial banks to remain competitive in the market.

Thanks to the digital transformation of all levels of business and the use of new technological solutions, banks will be able to improve current offers to customers. However, for successful transformation into a fully digital universal bank, financial institutions need to have sufficient expertise in implementing novel technologies into their operational system. This is something that we can help with. 

FPT Software has a wide range of knowledge and tools to implement novel digital technologies into any business. With over 10 years of experience in software outsourcing, we provide comprehensive services: consulting, management, maintenance. We always strive for the highest level of customer satisfaction.