Digital Technologies inTransformation of Classical Retail Bank into Digital Bank M

Digital Technologies inTransformation of Classical Retail Bank into Digital Bank M

Abstract — This paper consideres, proposes and describes possibilities and methods for using digital electronic technologies for transformation of classical banks into modern digital banks. Digital electronic technologies are widely used, including banking, bank operations and services as one of important sectors. Application of different types of digital technologies, including computers, computer networks, digital communication, Internet and information and communication technologies, with appropriate software, enables increasing speed, security and efficiency of all banking operations and services. It gives many benefits and advantages to the banks and to users of banking services. Way to use modern digital technologies to effectively transform classical financial data bank into digital data bank on the example of typical commercial/retail bank is proposed and described. It is also proposed organizational model of the digital bank. Advantages of using digital technologies and digital banks compared with classical banks are given. Keywords — Digital electronic technologies, Information technologies, Bank transformation, Classical bank, Digital bank.

INTRODUCTION

Modernization of banks, banking sector, financial institutions and financial sector necessarily involves introduction and application of modern digital electronic technologies based on using different kinds of computer systems, computer system networks, digital communication, Internet, mobile phones and similarly. It also needs appropriate data bases and software applications (APP) for different needed bank services. All it increases speed, security and efficiency of all banking and financial operations and services. It also brings many benefits and advantages to the banks and to users/clients of bank services. All this processes lead to transformation of banks from classical financial retail data banks into modern digital data banks [1-5]. Possibility and way to apply modern digital electronic technologies for efective transformation of classical financial data bank into digital data bank are considered, proposed and described in the paper. The process of transformation was ilustrated via proposed transformation phases on example of a commercial bank. Organizational model of the digital bank and organization of the bank information system were also proposed and given.

CLASSICAL AND DIGITAL BANK

The classical bank with its the biggest part is a retail bank. Such banks are waiting for the clients to come into tha bank premises with their requests and needs for the services. Such way of work creates many problems and disadvantages to clients and to banks. Clients need to go to the bank premises and to wait for the service wasting their time. Banks need to provide enough premises and space for the clients and enough personal for the services. It is also well known that it is very hard to adapt the classical bank to use growing power of digital and mobile electronic technologies and devices. In the time of appearance of the computers, data base servers and communication links banks were one of the leaders in the introduction of the new technologies. But, the latest expansion of digital and mobile technologies and devices banks were received quite unprepared. The main reason is in the classical retail bank organization that is impossible to be adjusted, without significant changes, to new technology, in the way it takes full advantage of it. The basis of the classical bank is the Central Unit. The unit includes the strategic and operational management of the bank, information technologies (IT) center, marketing, call center, back office, accounting, legal service, head of retail and corporate and other support services. Fig. 1 shows principle of typical classical bank organization. The Central Unit dictates the working procedures, designs and puts the products on the market, manages the operation of the bank network. The bank network consists of belonging branches, agencies and counters. Recently, the bank network was expanded with automated teller machine (ATM) and point of sale (POS) devices. That in some way represents a limited usage of modern digital technologies. The basic problem of this approach is the fact that the modern person/client, through the use of modern digital and mobile technologies, mobile smart phones and mobile computers, more and more information and services receives remotely using such devices. So, the need of client to come in the bank for a service becomes unnecessary and very rare. But, the basic concept of classical bank is to attract clients to visit their branches and offices. Banks try to use modern digital and IT technologies, but in a wrong way. Banks send emails and text messages, publish information on their web pages in order to attract clients to visit their offices. But, that is a real problem. Modern client would like to be able to get banking services on their mobile devices and to be able to realize the services from home, from working place, when is on a journey, etc. But, the concept of the classical bank is still to do everything to attract client to visit bank office and to present and sell to lient products there. It should to be changed and to enable clients to use and obtain banking services from anywhere and at any time. 

CONCLUSION

It is clear and no doubt that serious changes should be implemented in the banking sector in the future applying modern digital and mobile electronic technologies and systems. The way how it will be performed can vary in accordance with the specific factors. Here is proposed and described one of possible and expected ways. Speed of introduction of all mentioned activities and technologies will depend largely on the speed of adoption of the necessary legal regulation. It is related to the digital signature and other regulations that will replace the need for physical visit and presence of the client in the bank branches. It will also depend on the degree of client pressure to the banks to be able to use bank services remotely by modern mobile devices and systems. It is recommended that banks already perform some such activities and introduce such digital systems in order to more readily accept these changes. Even more, in accordance with their possibilities the banks should initiate these changes. Symbioses of banks and telecom operators, according to their perspective, have great chances to give good results, especially for local or regional organizations. It can be very good seen the tendency among bank clients to complete the entire retail business in a centralized way. For example, the buyer wants to buy a new kitchen. The buyer wants to select from one place model of the kitchen that suits to him/her and settle the commercial conditions at the same place (chooses a loan and makes a payment). The opinion is that if a bank does not create itself as a leader in this process, someone else will become a leader. In this sense, many professionals think about companies working with the most modern digital and mobile technologies and systems that successfully developed social networks, search engines and Internet shopping as new retail leaders. Such modern companies have a greater perspective to take over retail business and therefore retail banking in the future. The banks are actually very threatened if they do not access to the necessary changes and application of digital and mobile electronic systems on time. There is an opinion that banking is necessary but that banks are not.

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