Retail Banking In The Era Of Digital Transformation

Retail banking, also known as consumer banking or personal banking, is periodically progressing with the times. The rapid digital transformation in this sector has been further catapulted by the effects of the Coronavirus pandemic (COVID-19).

The previous lockdown measures around the world also posed questions to financial service providers on how to continue servicing clients without physical contact and digital solutions came to the fore.

This has therefore seen more retail bankers exploring innovative ways for individual consumers to manage their money, have access to credit, and deposit their money in a secure manner. All these are in a bid to complement traditional services offered by retail banks which include checking and savings accounts, mortgages, personal loans, credit cards and others.

Retail banks are facing pressure to transform as new entrants focused on customer experience gain significant market traction, according to the World Retail Banking Report 2020 (WRBR).

The report reveals that the global financial sector is in the midst of an historic transformation as nimble, digitally native non-traditional players continue to champion customer experience and redefine long-held principles to gain significant market traction.

The pandemic environment is moving consumers to interact more digitally with their banks, platform models offer agility and scalability during uncertain times. Such platforms include online banking, mobile applications as well as USSD code driven transactions.

Both service providers and consumers have at times found themselves having to play catch up to some of the latest technological and digital advancements that sprout every now and then. But it is an evolution that is bringing with it convenience and better ways of doing banking.

The report found that platform-based banks find it up to two-times easier to increase operating profits, unlock new sources of value, and improve operational efficiencies.

Interestingly Central banks across the developed and developing world have even begun considering the possibility of implementing a Central Bank Digital Currency (CBDC) to enhance drivers for economic growth and financial sector development such as financial inclusion, digital financial services and national payment system (NPS) efficiency. According to an online report carried by Cenfri this CBDC is a digital representation of sovereign currency, and in its retail form is most similar to physical cash. It can be accessed via an e-wallet or an account for frequent and used for low- to medium-value transactions.

It reveals that in 2019, the Central Bank of Eswatini (CBE) became one of the first Central Banks in sub-Saharan Africa to consider the potential and feasibility of CBDC through the application of a country diagnostic. This is a sign of moving with the times.

The first phase of a study found cases that motivate for further exploration into CBDC in Eswatini. One of these is that CBDC could potentially deepen customer demand and increase the usage of digital financial services by focusing on the mobile money rails and widening its use cases by lowering provider costs.

With this study released in August 2020, we look forward to further developments in this space. In the meantime though, we stay abreast with continuously improving and developing the latest digital applications for retail banking to move with the times we are in.