Tackling digital transformation in banking

Being such a necessity in the banking today, why does digital transformation in banks fail?
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Digital transformation is an absolute given for those banks who want to thrive. Internal drivers often center around cost efficiencies, with digitalization seen as a means to strip out unnecessary overheads. Fear of being overtaken by big tech is a major push too as banks seek to embrace digitalization as an engine for core growth.

However, according to Martin McCann, CEO and Co-Founder of Trade Ledger, some 95% of banks’ attempts to achieve this fail and financial institutions struggle significantly to trim processing times for day-to-day operations, and this could well end up costing them both customers and earnings. What’s blocking their progress?

The key issue, Martin says, is that they are seeking to tackle this transformation from the wrong direction.

“They always start with the assumption that this is a process re-engineering exercise, and it’s not. They’re trying to take existing business processes and technology workloads and move these to the cloud. And it’s all about cost-cutting and efficiency at a massive scale. But this fails. All they end up with is a slightly more efficient version of the same business. Ultimately, what they need to be doing is creating a complete re-imagining: considering what the digital data that exists today in the ecosystem where you operate will enable in terms of new ways of thinking about convenient, frictionless value-add for your customers.” – Martin McCann

“Finance is the world’s most heavily-regulated industry and the regulatory burden has now become so great that it’s negatively impacting the industry.” – Martin McCann

Outdated risk models create significant problems too:

“If you look at the risk models in business banking, most of them date back 20 or 30 years. So most of the banks that we look at are still using the same risk models today that were developed in the nineties.” – Martin McCann

Over-reliance on consulting companies isn’t always helpful either.

“Banks tend to outsource the problem to the consultants and ask them for a solution. Using skilled, external consultants in order to plug your skills gap is a great idea. Asking a consulting firm to come in and take care of your future strategy and deliver it is much more problematic.” – Martin McCann

So how do we build a successful digitalization strategy? There’s certainly plenty of need for swifter, more customer-friendly solutions. To achieve these, banks and fintechs should be working closely together to deliver successful automated, digitalized platforms.

Trade Ledger is a company specializing in lendtech that’s created a new digital lending technology platform for the banking sector. Previously, the loan approval process by banks would take several weeks and involve a great deal of documentation and a slew of staff hours. However, Trade Ledger has automated and revolutionized this process. It’s now possible to slash the time required for the loan approval process from a lengthy six weeks… to just four minutes.

“That’s everything from initial contact point to application, through to onboarding, the credit assessment, decisioning, documentation creation, product fulfillment, through to drawdowns, servicing and management of the product and reconciliation and closing. Typically, prior to Trade Ledger, a bank would need between six and eight systems to do that.” – Martin McCann

To find out more about digital transformation in banking and how Trade Ledger’s lending platform is helping plug the huge global credit gap for SMEs, listen to our new Banking on Air podcast episode with Martin McCann – Available on Apple Podcasts, Breaker, Google Podcasts, Overcast, Pocket Casts, Spotify or here:

Here is a rundown of episode:

  • 00:39 Introduction into lending, its’ future, and Trade Ledger
  • 07:10 Why digital transformation in banks doesn’t work
  • 17:36 How Trade Ledger pioneered the industry
  • 23:30 Cooperation with Vacuumlabs
  • 28:20 Future of Trade Ledger & banking

Links from the episode:

Martin McCann is CEO and Co-Founder of Trade Ledger, the world’s first open digital banking platform that gives banks the ability to assess business lending risk in real-time. Martin has over 20 years’ experience as a passionate technologist, business leader, investor, academic researcher, and public speaker specialized in the digitization of business.

‘Banking on Air’ is covering the challenges, opportunities, perspectives and opinions that matter in the world of fintech, digital and community banking, payments and technology. Our hosts Helene Panzarino and Marcel Klimo will look under the hood of the changing face of tech: the acceleration in all things digital, the impact of regulation and disruption, the need for genuine collaboration, and the specter of competitors old and new as it plays out in fintech and financial services around the world.

About Vacuumlabs

Vacuumlabs provides teams of flexible software engineers and designers with years of experience building fintech, online marketplaces, and digital products. Every step of the way, Vacuumlabs experts collaborate with clients, so that they can move fast, learn and iterate as they build world-class products together.