For the last one and a half years, COVID-19 has dominated and influenced the lives of eight billion global population to varying extents. The pandemic has changed many aspects of our lives, starting form work culture, social norms, hygiene practices, shopping behaviour, service requirements, and what not. While the pandemic has left us with large negative impacts, it has also given us the much-needed push to rethink our day-to-day lives and go for digitalisation.
Amid the pandemic, to ensure the essential functions of the economy, the financial sector has been among the early adopters of digitalisation. The pandemic made us realise that the need for a digital transformation in financial services has never been more urgent. Even during the complete shutdown in the country, the financial sector has continued to serve clients without interruption. To accomplish this, the financial service providers had to accelerate the digital transformation efforts and rethink their ways of operation. This push has helped to bring in the much-needed resolution in the financial service sector to keep up with the growing economy.
Among the notable instances, the shift to online and mobile banking has been a remarkable change during the pandemic. Banks have been forced to adapt and expand their online and mobile services and offer greater services through call centres. With most of the online portals and banking applications, customers can view statements, perform transactions, pay bills, and avail other value-added services. For some banks, clients can even open a bank account from their mobile app within minutes. The integration of technology in the operational processes has minimised the cost of service and prompted financial institutions to rethink the digitalisation of key processes to keep up with the transforming environment. The market competition has further forced financial institutions to come up with solutions that consider maximum customer satisfaction.
Fortunately, the transformation has not been one-sided. The pandemic also created the tipping point for the general population to accept digitalisation, by turning it from a choice to a necessity. While previously online or mobile banking has been mostly popular among the younger, tech-savvy clients, the pandemic somewhat pushed the traditionalist population into forced acceptance of new technologies. Evidently, digital payments have emerged as the safest, quickest, and most convenient option for financial services, as transactions can be carried out in a short time on a laptop or a mobile phone without health risks. This general acceptance has created opportunities for the financial service sector to offer greater personalised services at lower cost and effort.
While digitalisation has enabled clients to have greater access to services, it has also created the opportunity for service providers to have a better understanding of client behaviour through data analytics. With the application of data analytics, client data can help service providers offer personalised customer services and maximise customer experience. More importantly, it can make forecasts regarding future client requirements and manage processes accordingly. In the new normal of digitalisation, the competitive advantage will lie with the early adopters, who will be able to ensure organic growth by enabling product-market innovations. Thus, for sustainability, the financial service sector needs to re-imagine its front, middle, and back processes to truly gain the benefit of digital transformation.
Although the COVID-19 pandemic pushed the digital transformation in the financial sector, in general, we can all admit that the transformation is for the better and it should stay. However, sustainable digital transformation requires a significant change in the organisational culture and a fundamental change in mindset. Financial institutions, especially the government agencies, still holding on to legacy infrastructure must accept the new reality and move on. While such changes can have a widespread impact on a firm's operation initially, they will ensure long-term sustainability and growth. Finance sector, being a heavily regulated one, also needs policy-related support from the government to keep up with digital dynamics.
More importantly, in keeping with digitalisation, we need to rethink and upgrade our policies and security infrastructure to ensure sustainability. Financial institutions act as the custodian of peoples' financial assets. Digital transformation of services also allows them widespread access to clients' personal data. While this information creates significant opportunities for financial institutions to offer greater personalised services, it also creates a great risk of data theft. Thus, greater attention and resource allocation are needed from the side of financial service providers to ensure cyber security and protect data. The government thus needs to come forward with appropriate data protection policies and risk-mitigation guidelines to safeguard the rights of the citizens and the stability of the financial sector.
Fortunately, the push for digitalisation in the financial service sector came at the right time for digital Bangladesh. With our high internet penetration rate, and upcoming graduation to a middle-income economy, this is undoubtedly high time for us to embrace modernisation of our financial services. To ensure a sustainable digital future, we need to re-imagine our workplace, workforce, and people-oriented operations and culture. We also need greater policy support from the government and related bodies to ensure stability throughout the process of digital transformation.
Aroka Chowdhury ACMA, CGMA is with a leading investment bank in Bangladesh.