Digital transformation 2.0 (DT 2.0) is the next phase in the technological revolution sweeping across the global banking industry. As this wave washes over the banking industry, private banks must consider how it will affect business, client relations, and more.
Private banks have always placed greater emphasis on personalized service than public banking institutions. With the support of digital transformation 2.0, private banks can ascend further and meet the growing challenge of client demand for accessible financial services.
In this article, we will compare DT 1.0 to DT 2.0 and discuss how these differences can impact the private banking industry. Plus, we will cover three of the key focus areas and main benefits of DT 2.0 for private banks to keep in mind.
Comparing DT 1.0 to DT 2.0
During DT 1.0, some of the biggest priorities for financial institutions were implementing cloud-based solutions, gaining access to big data, and developing more impactful insights from advanced data analytics powered by AI and machine learning.
Comparatively, DT 2.0 strives to take the role of technology to a much higher level. Greater accessibility is a major priority in DT 2.0, pushing financial institutions that have been traditionally closed off — like private banks — to expand their digital network of communication.
Three of the key focus areas of DT 2.0 for private banks include:
- Open Finance: DT 1.0 sought to achieve an open banking system where banks could freely share data with consumer consent. Now, DT 2.0 is concerned with how to expand this open data sharing model to the rest of the financial industry and services beyond banking. This will still impact bankers, however, as it provides more opportunities to boost efficiency and gather more meaningful consumer insights.
- Blockchain: With the rise of cryptocurrencies still making waves around the world, the role of blockchain in finance is being more closely examined than ever. Blockchain does pose a potential threat to private banking, as more high-networth clients begin seeking blockchain-based accounts that give them total control over their wealth and assets. Yet, private banks can still spin this in their favor by enabling blockchain-based services, such as the ability to pledge cryptocurrency when taking out a secured loan.
- Omnichannel: Omnichannel at its core is a communication strategy that aims to make all of a business’s services and products available to clients, no matter which channel of communication they are coming from. In DT 2.0, omnichannel is set to play a much bigger role, especially for private banks that are working to adopt open finance and/or blockchain-based business models.
In a recent PwC Pulse Survey of business executives, the survey found that 60% of responding executives cited digital transformation as a “critical growth driver” in 2022.
The survey further states that business executives are shifting away from focusing on digital transformation for specific functional purposes and toward the use of digital transformation to optimize entire enterprises. Looking for more digital transformation implementation alternatives? Check out our Robotic Process Automation (RPA) page down below.
👉 Learn more about RPA in banking here!
How Private Banks are Approaching DT 2.0 vs. DT 1.0
For many public banks, one key objective in DT 1.0 was providing much more personalized products and services to clients. Private banks, on the other hand, had already been working toward this goal for years before, as private banking clients expect a much higher level of service from these institutions.
As such, DT 1.0 for private banks focused more heavily on establishing a strong digital presence, as well as creating a reliable digital infrastructure. With DT 2.0 now underway, private banks must now consider how they can sustain this digital presence long-term in terms of both compliance and client expectations.
In a 2019 article written by Steve D’Souza — the global head of private banking and wealth management at Fenergo — Steve hits the nail on the head by stating:
“ — by transitioning regulatory and compliance workflows from manual to digital, not only will institutions have the opportunity to reduce costs, improve efficiency levels and drastically minimize time-to-revenue, but private banking clients will be accustomed to a significantly more positive end-to-end customer experience.”
The Benefits of DT 2.0 for Private Banks
The rise of DT 2.0 presents many great potential benefits to private banks, including:
- Gaining a Bigger Market Share: By embracing DT 2.0, private banks gain a bigger overall market share. In turn, this enables private banks to grow revenues and sustain their growth pace with greater success and at a much larger scale.
- Providing Better Presentation: DT 2.0 allows private banks to provide a better level of presentation to clients, thus demonstrating to these clients that their digital needs are taken seriously. Plus, DT 2.0 will help private banks to establish themselves as trustworthy authorities within the digital banking space.
- Keeping Clients Satisfied & Loyal: More than anything, DT 2.0 gives private banks the opportunity to solidify their relationships with clients. Rather than allowing clients’ heads to be turned by better-looking and more advanced technology offered by competitors, DT 2.0 can help private banks to take the lead.
Digital transformation 2.0 is happening here and now.
For private banks to meet the challenge of this next wave of digitization, it is crucial to embrace the use of advanced technologies and ensure digital infrastructures are sound and secure.
At CPQi, our team has more than 15 years of experience implementing successful digital transformation solutions for financial institutions of all kinds. From staff augmentation that helps private banks find high-level technological talent to end-to-end transformational services, we have the solutions your institution needs to establish a strong presence in this digital era.
To learn more or to get started with CPQi, contact our team today.