Digital Transformation

Digital Transformation in the Banking Industry: Scenario, Challenges and Innovative Approaches to Accelerate the Process

Digital Transformation in the Banking Industry: Scenario, Challenges and Innovative Approaches to Accelerate the Process 1200 780 ITLG

In the banking sector, inquiring about what digital transformation is and how to approach this process is no longer just an alternative; it is now a priority in all business models. Taking a step forward when applying technology in order to streamline processes and optimize contact with customers has become essential since the COVID-19 pandemic. What approaches can put us one step ahead on this path? What are the main challenges that the banking industry is facing? All of that, in this article.

What is Digital Transformation?

Digital transformation always involves a process of applying new technologies in an effort to accelerate or optimize processes. But of course, when we talk about digital transformation, we’re discussing a phenomenon that is advancing and redefining itself day by day and differently in each industry. Regardless of the sector that we are considering, digital transformation always involves taking advantage of technological innovations to optimize processes inside and outside of companies, automating tasks and using artificial intelligence for a variety of purposes, from optimizing the user experience to improving the overall performance.

Until some time ago, the focus of digital transformation was mainly on the ability to communicate with the audience quickly and massively, but today that is no longer enough. Especially in the banking sector, considering the speed that automation offers us, it is necessary to add a high level of personalization when interacting with customers. They need to feel like banks interact with them —and only them—, that they are aware of their every preference, instead of feeling like they are part of a group or segment.

Digital Transformation in Banking: Two Challenges Brought by the Pandemic

As we said before, thinking about digital transformation in banking involves much bigger challenges than in any other sector. Not only because the Coronavirus (COVID-19) pandemic greatly accelerated the digitization of processes and communications, but especially because this is an industry in which security in customer contact and information handling is of paramount importance.

Thus, there are two equally important challenges: on the one hand, advancing in the application of new technologies in order to sustain the quality of service provided to customers who no longer visit bank offices, that is, in a market where the vast majority of customers are moving from traditional to digital transactions. To reflect this trend, according to a study conducted by Mastercard, in Latin America and the Caribbean, 78% of consumers say they will continue to choose contactless payments even after the pandemic, a number that rises to 82% among those under 35 years of age.

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What does this mean? It means that banking institutions must face this process of digitalization and gradual education of their customers while maintaining the same levels of trust and credibility. The rapid increase in the amount of banking apps, virtual wallets and home banking users must be able to coexist with the reassurance that each customer’s data —and money— is well protected. And of course, the consumer demands are also growing at the same pace as this accelerated digital transformation.

On the other hand, banks must also uphold these quality standards when thinking about continuing to attract new customers whose interactions will be 100% digital from day one, making the trust-building process more difficult and complex. We are talking about users who are torn between multiple digital banking and e-wallet options and who will make their decisions based not only on the benefits that each one offers, but also on the degree of security, credibility and awareness of their preferences that each one provides.

Digital Transformation for Banks: The Era of Personalization

Now that the situation has been presented, the big question that arises could be posed more or less as follows: what is the current scenario when it comes to talking about digital transformation in the banking sector? Well, if we had to sum it up in three essential items, they could be the following:

1) More and more information to manage. Banks tend to have a vast number of customers and handle a large volume of information in a short amount of time and on a daily basis. And while not so long ago this information was focused solely on the core banking or bank management system, the tool used to process customer transaction data and operations, this has changed completely.

Nowadays, each bank also has to manage, in coordination with its core platform, the information coming from peripheral platforms and new digital channels. From banking apps to the conversations that a bank has with its customers through social networks or websites, all of this information must be processed in error-free, risk-free and increasingly faster ways, according to customer demands.

2) Multiple points of contact. Along the same lines, the number of channels through which banks come into contact with customers has increased exponentially, as has —with the pandemic— the number of customers who choose these digital channels. An increasing number of operations, a new channel and a new demand.

3) Personalizing the bond with customers. As we stated above, everyone assumes that the bank keeps track of every conversation, that their preferences are known and that everything is perfectly in order. And that’s how it should be. What’s more, in the midst of digital transformation, banks need to reassure their customers that an interaction initiated on social media is just as important as one initiated traditionally in an office. 

Users are no longer content with feeling like they are part of a segment of customers who share more or less similar characteristics; each customer feels like they are a segment on their own, and they must be treated as such in order to have an edge in an ultra-competitive marketplace.

But of course, in the face of all these challenges, there is another question to be answered: what are the innovations that can help us successfully navigate this scenario? Or, in other words, how can a bank take advantage of digital acceleration? Well, let’s move on to that.

Examples and Innovative Approaches to Digital Transformation

  • Open Banking: Open Banking consists of using the information that customers agree to share with organizations in a way that is beneficial for them. We previously emphasized the importance of developing strategies 100% focused on customers and offering personalized and agile experiences to each one of them. However, moving information with speed, precision —and security, of course— not only within the same bank, but also across organizations, has become fundamental. Open Banking is what enables the creation of these banking ecosystems, offering simple access to each user’s banking information through an API (Application Programming Interface).

Open Banking not only affects the sharing of information such as balances, transactions or transfers across platforms, but it also affects the very openness of this information. The real impact is that it simplifies the entire connection between customers and the bank, as it enables an easier integration with other apps, with online stores or even with independent virtual wallets. With online banking, the limits can only be defined by the inventiveness of the bank.

  • Hyperautomation of processes: When digital transformation increases the amount of information that each bank must handle, it becomes essential to activate the autopilot, that is, the process automation. To put it simply, digital transformation is not possible without automation, starting with the fact that it is essential to provide automated responses to customer demands in real time.

And what does the hyperautomation of processes involve? It is about combining multiple tools, from Machine Learning (ML) to Artificial Intelligence (AI), in order to manage and simplify a variety of processes that used to be complex. What is automation? Automation means configuring a communication based on a customer’s activity in home banking so that an email is sent as soon as a transfer is made; at the same time, it means allowing the system’s machine learning to record each user’s previous activities and generate pre-configured and personalized flows. So, what does this automation allow? 

  • To carry out more transactions in less time and without errors.
  • To streamline the connection with users.
  • To comprehensively improve the productivity of an institution.
  • Integrating customer interaction: We discussed how digital transformation implies having multiple channels of interaction with customers, which is why it is impossible to think about hyperautomation without integrating these contact channels, which are constantly expanding. When a customer interacts with the bank through its home banking app on their cellphone, that interaction must be recorded in all the other channels. 

Customers are no longer willing to wait for notifications or, even less, for answers to their complaints, and so the way to offer these answers in real time is through an effective integration of channels that streamlines the response process and the flow of information across them.

  • Bonus track → the internal culture of the company: At ITLG, we often say that the company that makes it is not the strongest; it is the one that best adapts to the changes and new ways of doing business in the digital era. That is why we believe that digital transformation, especially in the banking sector, also involves the people and the culture of each company.

The human factor plays a much more important role than most organizations think because ultimately, no digital transformation process is possible without people who understand the needs of the customers and how to address them. Integrating all points of contact and hyperautomating all processes related to the bank is not enough if the people who are part of that ecosystem are not aligned with that culture, so making them an integral part of the process becomes fundamental. 


There is a team of experts ready to help you with your company’s digital transformation in a personalized and comprehensive way. Contact us by clicking here.

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Keys and Challenges in Platform Integration: A Story of Success

Keys and Challenges in Platform Integration: A Story of Success 1200 801 ITLG

What do you do when a long-standing client has one of those problems that just can’t wait? In this article, we talked to Luis María Constantini, CEO & Founder of ITLG, about the challenges of platform integration and the difficult task of developing an integration platform in record time in order to sustain a customer loyalty program between different companies. Read on and learn more about this story of success.

What is Platform Integration?

Platform Integration means making different systems talk to each other in a process that can involve two or more systems, in one or more directions and in a more or less complex way. Digital Transformation implies a constant multiplication of systems, tools and channels, and it is this integration that allows us to make them interact in the simplest way.

Synchronizing data between platforms to make information flow at the speed required by clients or accelerating dialog between different organizations or work areas —processes that used to take, and can still take, long periods of time— can only be accelerated through system integration. As a result, a customer’s account information can be updated in real time on different platforms, or the account can be synchronized with an e-wallet independently from the bank.

Why is it necessary to integrate platforms?

This question is much more complex and therefore, it can have many different answers. That’s why we decided to consult with Luis María Constantini, CEO & Founder of ITLG, to understand the why, how and when of these processes. “Companies need information to flow faster among platforms, as well as data to be synchronized in all systems with the least amount of human time invested in it,” says Constantini. The goal, he says, is to enable work teams to focus more on planning or optimizing strategies and less on executing them.

However, he adds, the importance of process automation does not stop there. In his own words, “integrating platforms ends up having a direct impact on how quickly we can make decisions based on the information we have, whether it be internal or external data. The faster we can make that information flow, the quicker we’ll be able to define goals, establish how to measure them and draw conclusions from the information collected.”
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Platform Integration: Example of a first-hand experience of success

When we asked Constantini if he would give us an example or a specific experience that reflects the importance of platform integration, he presented us with a scenario that was as clear as it was difficult to solve: “Let’s imagine that we are driving a truck at full speed, during rush hour, along one of the busiest streets of a city. All of a sudden, we find out that in about a mile, all four tires of the truck will be blown out, but we cannot slow down or stop.”

The question, of course, is how to solve this, but the CEO suggests taking the situation a little bit further: “We also have to be able to change the tires on the move, without hitting the brakes and without anyone noticing.” An impossible task?

Constantini automatically takes this scenario to a recent and real experience: “Not so long ago, an ITLG client we’ve been working with for over a decade, a leading bank in the Caribbean, brought us a situation like this.” Providing more details about the challenge, he adds: “They had an operating outsourced integration platform, in the Platform as a Service format, to carry out a customer loyalty program between the bank, a points-based benefit card from one of the leading card issuers in the world, and an airline. All of a sudden, the company that provided this service decided to stop providing it.” Boom. Chaos. Or so it seemed.

What did this downfall imply? Constantini states that this outsourced platform was the one keeping the systems integrated, which allowed for this customer loyalty program to exist. “If you are a customer of a bank or an airline (or both), then you must know how important these programs are. In this specific case, we are talking about one of the most important banks in the continent, operating in over 15 countries and in alliance with the most prestigious card issuers in the world,” he explains.

According to the CEO, the situation involved two main issues: first, the deadline for solving this problem was very tight, far beyond the logical time frame for such a process. Second —and most importantly—, the previous supplier had not provided any information about its processes, so they had no information on the customers, on how that integration worked internally or on the mileage statements. “It was a real Black Box, so we had to work blindly and still find a way to achieve the same results,” he continues.

How was this situation approached? Constantini says that the first step was to accept the challenge, “Not only because this client trusts us, but also because these decisions have to be made at the very moment an emergency arises. Yes or no. We always say yes because that’s what ITLG teams are trained to do,” he affirms.

“From then on, it was all about working out the enigma left by the previous supplier, for which we had to apply reverse engineering to go backwards and decipher how the platform and its integrations worked,” says Constantini. This involved understanding how and in which directions the information flowed, as well as what calculations were made with that information, all of which implied a huge amount of work against the clock.

How did you rise to the challenge? Constantini recalls: “Once we decoded the dynamics of the different processes that had to be automated and identified which platforms were to be integrated, we had to get it up and running without the ‘truck’ ever stopping.” And he adds: “We had to make sure that the information of each transaction originated by a customer who was a member of that benefit card was sent to the bank’s payment processor, and from there to the airline’s database, previously checking that the customer was actually part of that loyalty program. If everything was OK, the information would go back to the bank.”

What was the result achieved? “Obviously, we were able to reach the goal that we had set, meeting the client’s expectations and not creating setbacks in the benefit program. But that’s not all: with the clock ticking, we ended up developing a platform 100 times faster than the one they had been using.”

If you have a challenge like this one, contact us here. ITLG is ready to rise to it.