What does digitalization mean for banks?

Digitization also brings challenges. For example, all end devices must be compatible with the banking solution.FROM CHRISTOPH OGGENFUSS*What does digitization of companies mean? "Our customers increasingly expect to be able to cover their needs 7×24. The web is becoming the central portal of entry for this. This increased customer demand requires us to offer a customer-friendly, highly available and high-performance solution with the target architecture of the IT systems involved," answers Marcel Hurschler.With regard to the depth of access for customers in the web portal, LUKB has chosen a clever and plausible approach: The more personal data the customer discloses, the more functionality and individualized information is available to him. With this approach, the "permission question" is then also clarified. The internal motivation for the current web conversion project is threefold: reduction of interfaces, lean processes, increased customer loyalty. Hurschler sees the central challenge of this important project for LUKB not in mastering the technology, but rather in understanding the organizational implications with changed forms of work for employees. This calls for early and prudent change management. The triggering of this project is not due to pressure from customers, but to the conviction of the bank's management that they want to be ready in good time for evolving customer requirements in the digital world. The project is scheduled to be implemented in summer 2015 - by which time the next trends in changing customer behavior will already be on the horizon.And what does Mr. Hurschler think about the discussion of whether digitization is more hype or reality? "In banking in particular, customers have been carrying out transactions digitally via online banking for years. Customers appreciate simple options with few media disruptions and low costs when dealing with the bank." From the bank's point of view, it is hoped that contemporary and attractive online offerings will also strengthen customer loyalty, although it is well aware that this correlation has not really been substantiated.Marcel Hurschler sees the drivers for digitization on the side of the end devices. The diversity of "smart" devices also represents a major challenge for the bank. The primary opportunity for digitization lies in increasing customer loyalty, Hurschler continues. The LUKB had the goal of reducing counter transactions from 900,000 to 700,000 per year without increasing fees, i.e., without "punishment. Individual customer meetings were used to make the advantages of online services transparent, and the result speaks for itself. "Today, there are still 600,000 counter transactions and that will not be the end for a long time," says Hurschler. Thus, even in the increasingly digital world, the personal customer meeting is a key to success. LUKB sees risks in the area of regulations and security. This is because a lot is still in flux in this regard today, which places high flexibility requirements on the architecture and design of the online solution.Marcel Hurschler sees the central challenge in the digital transformation, and especially in banking, as being with the employees and not with the technology. This is because bank employees have recently been confronted with high regulatory requirements, standardization and additional technological requirements. It remains the task of management to turn this "threat" into an opportunity.To what extent can digitalization threaten the business model of a bank like LUKB? "Business models will change under the influence of digitalization. Since we are well positioned with our standard banking software Avaloq and at the same time have a good cost structure, we see ourselves in an advantageous competitive position." From this position of strength, LUKB can also cushion any risks associated with the digital transformation.