The banking sectors return to work after the recent Coronavirus crisis and the capability of individual firms to overcome the issues they might face. In order to thrive through the time, the firms need to be reliant on better connectivity and efficiency across the industry as a whole. The world is capable of going through a quick digital transformation, especially in an emergency and the sudden change of pace was actually seen in the recent times. But now the times have changed as the countries are accepting “alternative arrangements” for original paper export certificates, New York is allowing notary services by video, and global banks are accepting “original” documents and acceptances by email. Who would have thought?
Emerging from the pandemic, digital transformation is seen to be extending from personal or individual cases to firm level deployment and even to industrial sectors. It would not be wrong to say that the financial industries compared to all the other industries, is the one to be most critically altered. The banks continues to be challenged as its inefficient and old traditional methods still persist and the adaptation of technology is slow. But there has been an improvement as the reliance of the manual process methods is slowly shifting to regularized digital transformations. On the contrary, these methods accepted by individual banks are not sufficient in fact they have very limited benefits. But including greater automation of business processes, acceleration in adoption of electronic channels, elimination of manual processes, standardization of non-value-adding business practices and a focus on driving up data quality and speed of information flows will definitely help. And then the consideration of achieving digital transformation at the level of the entire market is possible. The digital industry transformation project helps not only to optimize the trading but also help settle the asset between buyer and seller and their custodians too. If this is done right, the prize is a huge “productivity dividend” as entire markets will be unshackled from their analogue histories. The Italian finance service industry provided a pertinent use of digital industry transformation. 32 banks in Italy recently went live with one of the first real-world deployments of enterprise block chain technology in interbank financial markets. Built by the Italian Banking Association, ABI, the Spunta Banca DLT app on R3’s Corda Enterprise platform tackled the market-wide issue of interbank reconciliation. In Italy the traditional reconciliation process for interbank transaction is governed by the Spunta process is completely complex and resolving these mismatches in transactions is a labor intensive process. It is often hampered by the lack of standardization, fragmented communication and no single version of the truth. The Spunta Banca DLT app automates the reconciliation process and enables banks to pinpoint mismatches in interbank transactions quickly by sharing common data in a secure way. To have connected such a large and diverse group of banks in an active environment to fight a shared enemy is a major milestone for digital transformation in the Italian banking sector. This has provided an outlook of what the future might be brighter , more efficient and completely interconnected to all the financial markets in the coming years.
The current crisis has accelerated the launch of digital technology usage for many cases and across a wide range of sectors. And those that stand against the time will be developing with an industry level mindset and not firm level. If the banks need to retain their critical role in the global economy they have to adopt this new way of thinking regarding the use of technology. It is clear that the age of inter-bank optimization is over – the path forward from this crisis will be paved by software that focuses on adding real value for entire markets, connecting banks to overcome the biggest challenges they share as an industry.