Pub. 11 2021 Issue 3

18 azbankers.org Digital Banking: Facing Operational Challenges and Strategic Opportunities D IGITALIZATION CONTINUES TO change the way financial institutions interact with clients. Lower levels of face-to-face contact, combined with higher expectations related to turnaround times as well as digital channel data volume, have created unprecedented operational and financial challenges for banks and credit unions. Additional digital-related pressures that demand management focus include increased card-not-present transactions, requirements for new KYC solutions, higher levels of fraud, and staff-related issues ranging from remote workforce oversight to recruitment and training. Consumer and business customers have embraced the digital environment for information transfer, efficient inquiry and a broad range of transactions. The marketplace was primed for these changes, as the technology necessary to transfer information digitally has long been available in homes and small businesses. Digitalization has made some services not previously available on a large scale accessible to a much broader demographic. Information once captured by individual business units and siloed at financial institutions is now available for application across a growing inventory of financial products and services. Over the past 18 months – driven primarily by pandemic-related market factors – many financial institutions and their vendor partners have accelerated the timelines for developing their digitalization and automation capabilities. Given the rapid implementation of those solutions, it can be beneficial to identify some of the challenges and opportunities that currently exist. Two Operational Challenges Related to Digitalization In today’s banking environment – which requires specific skills sets to support rapid response, accuracy, compliance and frictionless customer experience – the value of the generalist has been diminished, and there is now a premium on operational specialists. The demand for those individuals, however, currently exceeds the supply in many areas. At least in the short term, this requirement may be best supported by a combination of experienced third-party partners to ensure that cybersecurity, fraud mitigation By Robert Vandenbergh