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How can banks continue digital transformation in a downturn?
Journal of Digital Banking,
8
(1),
6-12
(2023)
Abstract
Digital technologies have come to play an increasingly important role in our lives. Their availability to customers has set expectations for personalised experiences with the banking services they use, making it imperative for banks to innovate and continuously evolve their product offerings to keep up. The banks that are able to do this most successfully are new entrants with advanced technological capabilities that can adapt to changes in the economic environment and consumers’ shifting expectations more quickly. It is this adaptability and technological knowledge that ensures that these new entrants are best positioned to capitalise on periods of downturn. This paper will examine digital transformations that have reshaped the world of banking to date, including the shift to digital banking in the wake of the COVID-19 pandemic, the uses of data and analytics, as well as data-driven tools like AI in present-day retail banking. Furthermore, the paper will detail areas where digital transformation is yet to exert a profound effect on banking, particularly lending to small and medium-sized enterprises (SMEs), an essential area given the contribution that small-to-medium businesses make to economic growth. Finally, the paper will explore ways that new entrants can use digitalisation to support these crucial businesses, as well as detail other examples of digital innovations that are shaping the future of banking; for example, AI automation in know your customer (KYC) and the rise of ‘open banking’.
Keywords: banking; digitalisation; SMEs; downturn; data; innovation
The full article is available to subscribers to the journal.
Author's Biography
Rishi Khosla is the CEO and co-founder of OakNorth. He started his first business, Copal Partners, a financial research company, in 2002 with just US$60k. Over 12 years, he and his co-founder, Joel Perlman, scaled it up to a 3,000-employee organisation across 13 markets, before selling it to Moody’s Corporation (NYSE: MCO) in 2014. They then set out to build their second business, OakNorth, a financial technology company with a mission to empower the ‘missing middle’ — businesses that are the largest contributors of economic and employment growth yet still struggle to access fast, flexible debt finance. OakNorth is addressing this funding gap with its Credit Intelligence software, which it licenses to commercial lenders such as Fifth Third and PNC, and which it uses within its own bank in the UK, OakNorth Bank. Rishi Khosla is an early-stage investor in a number of leading technology companies, including PayPal. In 2019, he was awarded an OBE (Order of the British Empire) from her Majesty The Queen for services to business.
