Thoughts on becoming a digital bank, from a long internal discussion — edited for brevity
There is a large wave of technology transformation that is impacting business after business, and we see it challenging the status quo in banking and financial services. This wave is composed of technologies that are changing the way we create, store, and communicate information, from cloud computing offering computing capacity in demand at very low cost, to powerful mobile devices that can perform complex functions on the go, to new methods for storing and analysing huge amounts of data (some time called “big data”). All these, coupled with ubiquitous broadband Internet access, have changed many industries, one after another, and banking may well be next in line.
Sberbank has taken many steps towards transforming itself into a digital bank. For many years, our strategy has been to offer our clients access to banking services in digital form, through online and mobile banking apps and web sites for self-service, but also as a way of offering new services that can be delivered only in digital form. While we still have the largest physical branch network in Russia, we see tremendous growth in the acceptance and usage of online and digital banking services.
Sberbank is well positioned to take advantage of the new digital economy, a position achieved through both the vision of transforming the bank through modern technologies as well as the careful investment and execution of major IT transformation projects. In this respect, the bank is constantly experimenting with new business models and emerging technologies that have the potential to disrupt the financial services industry.
Our long term strategy is to transform a significant part of the bank to take full advantage of digital technologies. We can envision a future where straight-through-processing in banking operations is directly connected to a unified client-facing collection of applications that provide both self-service and advanced assistance for human-assisted banking activities.
We have been using internal collaboration tools for a couple of years now, with excellent results. We are now planing a much larger role for internal collaboration tools, as a significant factor in improving the productivity of our employees. A special mention about our internal idea management system, deployed several years ago and used to collect thousands of business improvement ideas from our staff and our clients, with very large business impact. We can say that we have shown that crowdsourcing methods can be used successfully in a business environment as complex and large as Sberbank.
Banking is undergoing a huge transformation, with traditional business models being questioned by the last five years of global problems, and the acceleration of digital transformation of many businesses providing the background and support for attempts at challenging the domination of banks. We see thousands of startups taking advantage of mobility, cloud computing, big data analytics to successfully challenge incumbent players. It is still early, but the momentum is here and banks should not ignore it.
We can think of two ways that social media is impacting the financial services industry. First, all social media platforms are, essentially, communication platforms, and we have seen many experiments using the social communication means for performing banking activities, from requesting loans over Twitter, to paying for digital goods on Facebook, and using a myriad of communication mechanisms for transferring payment information. Second, through our interactions in social computing environments, we create a mirror image of ourselves and our physical social group, that can be used, by consumers or businesses, to create a measure of trust much better than traditional methods. Such a measure is starting to be used by innovative banks to influence major money-related decisions such as giving loans.
It is too early to say, but if history is any indication, the banks that ignore the digital technology impact on financial services will suffer. We have seen industry after industry being completely redesigned through the impact of digital transformation, and banking may well be next.