Digital Transformation in Banking: CX & DeFi Enhancements

DeFi & CX: Two of the biggest banking transformation trends this year
The digital transformation of the banking industry is in full flow as banks look to automate customer experiences and scale DeFi efforts

The extensive outlook for digital transformation in banking was expected this year. In December last year, Provenir’s Managing Director for EMEA, Frodo Berg, said “the widespread adoption of hyper-automation and the integration of AI will further empower financial institutions to streamline their operations, boost efficiency and harness the power of data analytics”.

As we hit the mid-point of 2024, legacy banks' efforts to scale their digital transformation are coming to the fore.

Digital transformation in banking: Enhancing customer experiences

According to Confluent’s Director of Financial Services, Peter Pugh-Jones, the first shift for banks is to realise they are “fundamentally data companies: really, data is their ‘product’, rather than the agreements they enter with customers.”

Now, it’s about using the data in the right way to meet customers where they are. Shilpa Doreswamy, Head of Banking at GFT UK, notes the impact of hyper-personalised offerings changing expectations consumers have of their financial institution. 

She says: “The creation of hyper-personalised customer experiences through the use of AI and advanced data analytics to provide tailored financial advice, offers and customer support through digital platforms. 

“Leveraging AI and machine learning for data-driven decision-making will also become pivotal. Use cases around customer acquisition, personalised product recommendations, real-time fraud prevention and process optimisation will expand.”

BRD recently shared its transformation journey with FinTech Magazine. It has started introducing data analytics to maximise the vast pools of existing data while introducing AI gradually to streamline operations and enhance customer experience. 

“AI is being introduced on a small scale, meaning we have a very consistent path ahead, which is the way to go with AI,” says BRD Executive Director for Digital Transformation, Maja Mikic. 

Elsewhere, Santander UK's Chief Transformation Officer and Director of Financial Crime, Jasmeet Narang, outlined the bank's path to a digital future. You can find out more in the video below. 

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The age of DeFi is here

The way money is transferred is changing too, with the banking sector making advancements in decentralised finance (DeFi). 

Earlier this year, Prakash Pattni, Global MD for Financial Services Digital Transformation at IBM, told us: “While we’re at the beginning of the generative AI (GenAI) journey, the banking sector is further along with decentralised finance (DeFi). 

“We’re seeing much more focus on central bank digital currencies (CBDCs) as they gain traction and central banks exploring the possibility of issuing their own regulated digital currencies. There have already been tests of a digital Euro in Spain. 

“This is shifting the focus away from cryptocurrencies and towards DeFi becoming mainstream, so we’ll move into the sphere of regulated entities where more people can use it online with established banks. 

“This will lead to the creation of more retail solutions but also simplify cross-border payments. Fintech companies will explore ways to make it part of their day-to-day assets and digital currencies will see broader adoption due to legitimacy, further embedding them into society.”

Central banking institutions are leveraging similar technologies to build real-time payments networks. Brazilian RTP network Pix (launched by Brazil’s central bank) has fast become the favoured way for businesses, particularly SMEs, to complete payments, without the need for ‘middle-men’ credit card infrastructures.

The use of Pix rose 74% in 2023 over the prior-year period, accounting for 42 billion payments across Brazil’s economy.

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