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What is a digital bank?

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This question arises fairly often and I guess it’s because some people think of it as the addition of mobile apps and tablets; others believe it is creating a paperless bank; whilst others talk about a digitalisation of processes and products.

We had a debate about this on Facebook during the summer when Jin Zwicky , VP of Experience Design at OCBC Bank,  asked: “What’s your definition of ‘digital’ in banking?”  The question garnered over 100 comments and was written up nicely by Jim Marous on The Financial Brand.

Then, it was asked again by Pascal Bouvier on twitter last week 

What does #digitalbanking really mean? (So many definitions out there) @Chris_Skinner @robfindlay @brettking @parkparadigm

— Pascal Bouvier (@pascalbouvier) November 26, 2014

Therefore, here’s a quick summary of my view on what constitutes a digital bank.

First and foremost, it is a bank built with a vision to reach out to customers through digital augmentation.  It is build specifically to offer the customer the service of their choice through the access of their choice.  It believes wholeheartedly that, in order to do that and because the customer now has so many different methods to access, that the bank therefore has to be designed and created upon a digital core infrastructure.  The digital core is a consistent enterprise wide, cleansed data store that is accessible internally and externally through a strata of access layers.

In other words, the start point of a digital bank is to be IP-enabled at its core.  No legacy.  No spaghetti.  No barriers to its beating heart, except those that avoid fraud and cyberattacks.

Second, the digital bank then creates outreach through access.  That access can be both physical and digital, but it’s outreach to the digital core on the basis of providing customer choice.  In other words, the customer may visit a branch, call the contact centre, make a comment on twitter or facebook, or touch the bank’s mortgage offers via a google search.  Because the bank has a digital core, it will be aware of all these access points and touches, and will respond accordingly and consistently.  For example, if the customer has researched mortgage deals online last night, checked the latest interest rates on the app in the morning and walks into the branch at lunchtime, the bank will be ready with their mortgage specialists at hand – possibly through a videolink to a small branch – to provide the advice needed for the customer to make the decision over the mortgage and its term.

Third, the digital bank has an organisation that is geared to digital.  The main form of customer outreach is through social media on the network, via video to advisors, and focused upon being at the point of relevance to the customer in their daily life.  It focuses upon augmenting the customers’ life through digital outreach, but recognises that the real magic is when the customer engages directly with human contact.  The human contact through the network, the telephone or face-to-face is seeing as the magical touchpoint.  All others are purely geared towards removing friction through digital enhancement.

Fourth, the digital bank will have an innate knowledge of the customer.  They will leverage data as a competitive differentiation, and see a single view of the customer as the ultimate view.  They will know that data association and predictive, proactive, proximity-based service is the place they will win.

Finally, the digital bank will have a boardroom that sees digital as their culture, rather than a project.  The bank does not have a digital team or a budget for digital.  They have integrated digital into their core, and see it as the duty of everyone in the bank to identify how to use digital series to touch the customer better, at lower cost and with an intimacy and data differentiation far more fit for the digital age.  In other words, an Amazon processor of finance rather than a Barnes & Noble.

There are many other factors that create a digital bank, but this last piece is probably the most important: that it is the leadership who create a digital culture.  Digital banks do not see digital as an adjunct or addition, but as core.  They have re-engineered their bank to be 100% customer-aligned through that digital core.  That’s a real digital bank.

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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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