Taking digital banking to the next level with data modernization

EVEN in times of business uncertainty, enterprises can count on customers’ expectations for convenience and seamless transactions. Arguably, recent years have shown that nowhere is this more evident than in financial services.

Sure enough, banks have responded to this by vigorously pursuing digital transformation, with the Bangko Sentral ng Pilipinas saying that the volume of digital payments rose to 42.1% of total transactions in 2022 from 30.3% in 2021.

However, despite outcomes like 30% of the unbanked and underbanked entering the financial system between 2019 and 2021, financial services are grappling with digital fragmentation.

Digital sprawl’s impact is farreaching as it impedes interoperability. With many mission-critical business processes distributed across a slew of applications, businesses are mired in chaos. In real terms, this lack of cohesion makes it harder to get the data to identify new opportunities for driving financial inclusion.

In addition, while the technology stack of the average financial services provider has changed, customer expectations have not. Banks will still need to be able to demonstrate that they can provide lifetime value for customers, with offerings that are tailored to their evolving financial needs.

THE FUTURE IS CONNECTED

All too often, decision-makers view compliance and customer satisfaction as separate and unrelated to each other. However, to meet the growing demands for financial inclusion and improved digital channel experiences in the Philippines, acknowledging the inherent connectedness of both is critical to refining workflows and improving operational processes. And this will likely come to define the near-term banking landscape, with McKinsey noting in a report this year that the rise of a tech-savvy bankable population is driving strong demand for mobile payments and other tech-driven financial sub-sectors. Clearly, this dynamic environment is a great opportunity for early adopters to gain a foothold, while laggards will fall by the wayside and struggle to stand out in an increasingly crowded field.

Data — more specifically their ability to move freely for swift and accurate decision-making — are essential here. Through information on preferences, needs and behavioral patterns, financial services providers can deepen their knowledge of existing and potential future customers. But with digitalization only contributing to banks’ ever-growing volumes of data, the question then is how do financial services providers in the Philippines holistically manage all the information they possess to deliver offerings that strike a chord with the communities they serve?

BETTER, MORE INCLUSIVE BANKING VIA INTEGRATION

To realize growth opportunities for digital banking in the Philippines, an ecosystem that encourages collaboration and seamless data sharing is non-negotiable. Simply put, this is a prerequisite for conducting the operational and analytical mapping needed to solve the complexities around customer processes.

Typically, a modern customer relationship management (CRM) system is the first port of call, but this needs to be done with process management and application integration in mind, too. Failing to ensure that the various tools and solutions across a company’s digital architecture are connected will only lead to information technology (IT) complexity and bring about an environment fraught with disparate applications that don’t work optimally.

To ensure the business is not saddled with technical debt and reduced returns on IT investments, a cloud-native integration system, or integration platform as a service (iPaaS), can connect the entire organization to ensure each department and their systems work in step.

Through an intelligent and powerful iPaaS, banks also do not need to get rid of their legacy systems, as it allows these older tools to still communicate effectively with newer, cloud applications. This addresses a specific problem identified by EY as a key stumbling block for the sector in the region, where financial services in the Asia Pacific were found struggling the most with trying to migrate legacy architecture and integrate multiple systems among sectors surveyed. By easily and quickly building interoperability across their digital architecture, financial services providers can overcome this hurdle while pursuing IT investment opportunities that prime them to realize returns.