5 Reasons Why Digital Ecosystems are the Future of Retail Banking

A digital ecosystem refers to a set of interconnected information technology resources that together function as a unit. For instance, recently you would have noticed that your bank now offers more than just simple banking solutions. By offering customers retail banking solutions at every stage of their life, banks are turning into digital ecosystems. To understand why banks are embracing the evolution of digital retail banking and undergoing retail banking digital transformation, read below –

• Digital Ecosystems Help Retain Customer Base

FinTech companies focused on the customer journey and the actual needs of the customer and accordingly offered solutions, thereby stealing customers from incumbent banks. Retail banks then recognized how the Pintech companies became successful in addressing customer pain points and removing frictions from financial processes. Instead of competing with these startups, banks decided to partner with them in order to offer a better customer experience and retain their customer base.

• A Win-Win Situation for All

In a digital ecosystem, there are three major stakeholders – customers, banks, and third-party service providers. Digital ecosystems ensure that all parties benefit. For instance, the customers get a better banking experience which is more convenient and easier to navigate. Since customers benefit from these improved services, they tend to stay loyal to the banks, which is a win for them. Finally, the external partners in the ecosystem get access to data that they can use to further improve their offerings.

• Digital Ecosystems Improve the Quality of Banking Systems

By introducing the features from their Fintech collaboration, banks have made the customer experience seamless. Banks are curating solutions that remove frictions from the banking process by deciding what FinTech apps to work with and whom not to work with. By making the customer experience user-friendly and customer first, they are improving the quality of the banking systems.

• Deliver more Intelligence

Different parties of the ecosystem have access to different sets of data. When one set of data is brought together with a separate set, it leads to fresh and new insights. These can then be further used to offer intelligent services to the customers. For instance, the bank compiles a customer’s financial information from their different bank accounts. The Fintech apps can then be used to offer customer information like how much their total budget is, how much they can spend until their next payday etc.

• Help Deliver a Richer Customer Experience

Last but not the least, digital ecosystems offer a complete package of services. They help banks tailor convenient, fast and hassle-free financial and non-financial solutions through the major defining moments in a customer’s life. For instance, buying a car, moving into a new house, or getting married are all major life events. All these events require interaction with the bank in some form. Banks now offer complementary services which make the consumer’s life easier. For instance, while a customer goes to the bank to get a mortgage on their house, banks also offer insurance services