Sarah Kocianski

When people start explaining how technology can be used to modernise financial services their language instantly becomes fraught with acronyms, buzzwords, and idioms that can make little sense to those both inside, and especially, outside the industry.

We have a hunch sometimes people do this to appear smart but we need to do more research!

Two terms that are widely used, and often confused, are digitisation and digitalisation. Given the most frequent culprits of this habit are the mainstream press, and in some cases financial institutions themselves, we set out to make the differences between the two clear.

The aim of this post is to make it easier for those not immersed in the industry every day to navigate announcements, industry press, and the strategies of the institutions they buy financial products from.

They’ll be able to make more informed decisions about the providers they choose. For financial institutions, it will be a helpful reminder about the importance of carefully choosing words when talking about digital strategies.

Digitisation


…is the process of converting analogue products and services to digital. For example, banks converting a paper application form to a version that can be completed online. The questions the form asks remain the same, as does the way the information it contains is processed.

Many financial service providers in Europe, North America, and large parts of Asia, have spent huge sums of money on digitisation. One such provider, Lloyds Banking Group, recently announced it would invest a huge £3 billion as part of its 2018 transformation strategy, a significant proportion of which will go towards “digitising the group”.

Most traditional bankers would say that they deliver digital banking! They’ve been selling current accounts, credit cards, and loans with targeted digital advertising; increasing customer satisfaction with their apps, and dramatically decreasing the costs of servicing customers through their ‘digital channel’.” Jason Bates, 11:FS Co-Founder and Co-Founder of Monzo and Starling.

“I see that big consultancies have been selling digitisation as a panacea for all the woes of banking for about 10 years. I hold this mainly due to the reason we see billions being spent and little movement in the market. What is analogue being made digital will never maximise the returns and the progression we have seen in the digital space. CEOs of banks bought digitisation because it sounded safe. What came out of that is now we have underwhelming change and astronomical costs.” David M. Brear, 11:FS CEO

Digitalisation


…moves beyond digitisation. It involves rethinking financial products and services from inception to delivery, based on an understanding of what modern technology can enable alongside what customers actually need and want.

Rather than delivering existing products and services via new channels and automating decades-old processes, digitalisation means giving customers financial services they enjoy using in a streamlined and frictionless way. That means using technology to:

  • Redesign processes
  • Reimagine business models
  • Rethink engagements with third parties
  • And most importantly, exploring improvement solutions for interacting and communicating with customers

In this new world, commodity banking products will be buried beneath intelligent services, end-to-end journeys, guided marketplaces and financial platforms. That will make everything about your finances clearer, easier to manage, and more transparent.” Jason Bates

That’s truly digital banking, and it’s only 1% finished.
digitisation “‘1% finished’ is a mindset, it’s an acknowledgement that the current shift from commodity banking products to intelligent digital services will create a new playing field that is completely different from before.

It’s less about the ‘1% Finished’ part and a kick in the chops of the banking industry over the change, or lack of, that we have seen.  More of an aspiration that with 99% opportunity and with this journey only just beginning that we need to explore quickly how to create truly digital banking that delivers services to customers they love.” – David M. Brear

11:FS builds next generation digital banks that provide intelligent services to make customers’ lives easier. Get in touch by emailing us on hello@11fs.com if you want to know more.