According to recent reports TymeBank has reached an impressive 670 000 customers in a matter of months. They’ve done so thanks to their strategic use of technologies such as artificial intelligence (AI), machine learning (ML) and big data.
Speaking at ITWeb Artificial Intelligence 2019 event in August, Dietmar Bohmer, chief data scientist at SA’s first digital bank, TymeBank, noted how cloud-based technologies were redefining banking models and allowing digital banks to disrupt more traditional banking models by delivering more affordable services to under-serviced members of the population.
In response to this, South Africa’s more established banks have developed apps and boosted their online banking platforms in an attempt to step up their digital game. But they’re not abandoning all aspects of their previous strategy. Banks like Absa have opted to invest heavily in digitising their branches. One aspect of their digital transformation strategy, according to Andy Baker, CTO at Absa Group, noted that the bank is bringing more digital technologies in to their branches across the country. Acknowledging that SA’s banking sector has been disrupted by technologies for a number of years now, Baker explains that this disruption is not only happening in South Africa, it’s happening across the globe.
As part of this revolution, we’ve seen the rise of Open Banking . The term is used to describe the use of application program interfaces (APIs) to give third-party developers access to data that was traditionally held by financial service providers or banks. These developers can build applications or offer them services based on this financial information. Open banking is a threat to long-established banks because it increases competition and demands that older banks change up the status quo and invest in new technologies.
Here are a few of the key differences between digital banks and traditional banks.
- Customer focus: While brick and mortar banks have to have a hugely comprehensive customer service offering, virtual banks are more niche and aimed at digital savvy clients or unbanked/underserved segments of the market.
- Touch points: Where traditional banks provide customers with a mix of physical and digital offerings, virtual banks are strictly digital.
- Transactions time frame: Digital banks sell themselves in being fast and fuss free, while traditional banking transactions generally take longer and require more paperwork and red tape.
- Operating costs: Digital banking models are lean and more cost-effective because they don’t require investment in physical branches. Conventional banks, on the other hand, have to spend large amounts of money on human resources and maintaining their branches.
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