Last year brought many changes to the rather familiar facets of our society: consumer sentiment and communication model. It was a difficult, stressful year, but also an interesting one in terms of addressing challenges and recognizing new opportunities.
The year 2020 became a catalyst of digital transformation of the financial system, which was finally forced to, do all the things it hadn’t had enough time to complete, as the pandemic and the quarantine restrictions shifted the habits of Ukrainians in favor of online solutions, digital technologies and cashless transactions.
In the same year, the National Bank of Ukraine adopted the decisions required to make remote identification via Bank ID possible and launched the Diia (Action) application, which is a breakthrough in remote servicing. This opened a new era in development of banking technologies.
It can be said that the market is already saturated with banking products. The demands and desires of the clients have already changed, and the clients are becoming more demanding of technologies, contactless service, and remote and quick account opening.
Consequently, competition in the financial sector has moved into the plane of technologies and digital innovation, highlighting the lack of products, sales channels and technologies of the banks and forcing them to invest in the transformational changes.
At O.Bank, our digital solution, launched in the beginning of 2020, received positive feedback in the market, providing a third of the new clients for Idea Bank. This is a clear proof of demand for new technologies and digital solutions in the market.
Digital transformation also impacted the banks’ business models and strategic planning. Online sales are starting to push out offline sales, and accordingly, there is a need to determine the future of offline sales channels. Neobanks are quite successfully implementing the business model without branches, using only digital technologies. The majority of big banks use applications and online versions only as a platform for the sale of their offline products and access to accounts, which is no longer enough.
Accordingly, combined business models featuring both offline sales channels and digital solutions will be emerging, with dedicated products, technologies, staff and separate units.
We can now observe some banks optimizing their cumbersome, ineffective networks of branches. However, the low efficiency of these branches does not depend on the efforts of their management for the most part. The issue is about competitiveness of the products in the market, demand for them, the right sales technologies, business processes and communication with the clients.
In contrast, some banks do not plan to reduce their networks of branches, instead developing effective points of sale, rebuilding the features offered by branches, building competitive products that are in demand and improving the level of communication with the clients instead.
Therefore, within the range of 3-5 years, the focus will be on the online sales and combined business models will continue to improve their efficiency, as diversification of sales channels and the opportunity to work with different segments of clients will provide possibilities for optimization of expenses and improve the efficiency of such banks.
Valova St. 11, Lviv, Ukraine, 79008
[email protected]
www.ideabank.ua
NBU license No. 96 dated 04.11.2011
