The banking industry is undergoing a radical transformation in the digital age, as customers demand more convenience, personalisation and innovation from their financial service providers. Banks that fail to adapt to the changing customer needs and expectations risk losing market share and relevance in the competitive landscape. One bank that has recognised the need for digital transformation and invested heavily in it is Nedbank, one of the big-four banks in South Africa. Nedbank has embarked on a massive R9 Billion digitisation project since 2016, with the aim of modernising and simplifying its IT systems and processes, as well as improving customer experience and efficiency.
The Challenges & Achievements of Nedbank’s digitisation project
CHALLENGES
- Migrating 1.5 billion records from the old core banking system to a new one, which took over two years and involved multiple testing cycles and data validations. The core banking system is the backbone of a bank’s operations, which handles a high volume of transactions such as deposits, withdrawals, loans, payments and more. The core banking system is expected to function without interruption, as any outage can cause serious problems for the bank and its customers. The core banking system often runs on legacy mainframe systems that are reliable but complex and slow to change.
Nedbank has overcome these challenges by following a strategy called Managed Evolution, which involves rationalising, standardising and simplifying its core banking systems in phases; leveraging cloud computing and automation to reduce costs and increase agility; integrating its core banking system with its digital platforms to offer seamless customer experience; and fostering a culture of innovation and collaboration across its business units. - Ensuring that the new digital platforms were secure, reliable and compliant with regulatory requirements, as well as meeting customer expectations for convenience and functionality.
Digital platforms are the front-end channels that customers use to interact with the bank’s services, such as mobile app, online banking, chatbots and more. Digital platforms are expected to offer convenience, functionality and innovation to customers, as well as enable new business models and revenue streams for the bank. Digital platforms often run on agile and cloud-based technologies that are flexible but require integration and security. - The skills gap. This is a mismatch between the skills that employers need and the skills that employees have. This challenge affects the banking sector as it undergoes digital transformation and faces new customer demands, regulatory requirements and competitive pressures. The bank requires data analytics skills in order to fully take advantage of the digital refresh.
Ned bank has now embarked on a program to build capabilities of data analytics, working in collaboration with colleagues in the IT sector and also creating a data analytics work stream to support colleagues in IT, risk, sales, marketing and HR.”Cyber security is another skill set Nedbank is looking for, to mitigate the risks presented by the growing digital channels.
ACHIEVEMENTS
- Launching a new mobile app and online banking platform that offer enhanced features such as biometric authentication, cardless cash withdrawals, QR code payments, personal financial management tools and more.
- Reducing IT costs by 20% through simplifying and rationalising IT systems and processes, as well as leveraging cloud computing and automation.
- increasing market share and customer satisfaction by offering innovative solutions such as Money Message (a payment service via WhatsApp), Avo (a super app that integrates e-commerce, entertainment and lifestyle services), Nedbank Money App Lite (a low-data banking app for entry-level smartphones) and more.
Nedbank’s digitisation project is a case study of how a bank can transform itself from being a traditional financial institution to being a digital-first financial services provider that delivers innovative solutions to its clients. The project is aligned with Nedbank’s vision of being an African bank that makes things happen for its stakeholders.
Nedbank’s digitisation project is not yet complete, but it has already shown significant results and benefits for the bank and its customers. The project is expected to continue until 2023 or beyond, as Nedbank strives to keep up with the fast-changing banking environment.
Nedbank’s digitisation project is an example of how banks can leverage technology to create value for their customers and stakeholders in the digital age. It is also an inspiration for other banks that want to embark on their own digital transformation journey.
My Thoughts
My advice to Nedbank would be to continue to focus on delivering innovative and convenient digital solutions to their customers while keeping an eye on the digitisation efforts of other banks. It is important to keep up with the rapid pace of change in technology and customer behavior and to benchmark against the best practices in the industry.
Nedbank’s Managed Evolution technology strategy has reached 89% completion of the IT build and has enabled continued double-digit growth in client digital metrics. This is a great achievement and shows that Nedbank is on the right track. However, other banks are also investing heavily in digitisation and expanding beyond their core into relevant ecosystems by providing services such as accounts-receivable management, factoring and cash-flow analysis to small and medium enterprise (SME) customers. They are also partnering with fintech start-ups to provide innovative digital solutions to their customers.
It is important for Nedbank to continue to invest in digital transformation initiatives and allocate resources wisely to address key areas such as refactoring of core banking, completion of the payment modernisation program, and outstanding components of on boarding and servicing of clients. At the same time, Nedbank should also focus on “humanizing” the banking experience by blending human and digital features to elevate customer experience.
We love to hear your thoughts
How do you feel about Nedbank’s digitisation project? A triumph or disaster? Please share your thoughts and opinions in the comments section below.
