IBM to banks: Time to transform and adapt to digital economy

By Rizal Raoul Reyes

Computing giant IBM recently said traditional banks and other financial institutions must adapt to the changes to be competitive in the digital economy and the cloud environment.

Likhit Wagle, IBM global industry general manager for banking and financial markets, said in a press briefing that traditional banks are experiencing challenges from start-ups and financial technology (fintechs).

To cope with the changes, Wagle said IBM outlined five key elements that banks must adopt as they embark on their transition to a cloud environment.

To become more agile in their delivery of cloud-based services, Wagle said banks can migrate to a hybrid cloud. He said this enables them to attain greater efficiency and integration.

Wagle urged banks to harness the power of analytics to deliver adaptive and personalized customer experiences. He said fintechs are giving traditional banks a stiff competition in this area.

Citing a recent IBM Institute for Business Value Study, Wagle said only 30 percent of the customers surveyed believe they are getting a personalized customer experience, despite 45 percent or bankers interviewed believe they are providing one.

“We believe that robust predictive analytics based on big data are key technology enablers for banks to deliver personalized customer experiences,” he said.

He said financial institutions must use cloud-based cognitive computing because it has the capabilities of analyzing data, understanding data and making the necessary recommendations regarding the information.

Banks must also develop a data-savvy culture to enable the staff to appreciate its value. “Establishing a culture where digital data is combined with other sources via cloud-based services can be used to better understand the challenges that clients face and help create the personalized experiences they expect,” the company said in a press statement.

Wagle pointed out advances in analytics and cognitive technologies make the processes simpler and hasten ease of doing business.

In addition to cloud, Wagle said banks must prepare for the coming of cognitive computing as AI (artificial intelligence) continues its rapid advance. He said major banks have utilized these tools to maintain their competitive edge.

With the emergence of fintechs as a major force to reckon with in the banking and finance industry, Wagle said traditional banks must innovate at once to cope with the competition.

“To thrive, we believe banks must radically reduce costs to invest in the business and operating models that can unlock data and create powerful new experiences for their customers,” he said.

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