Fujitsu presented an analysis of challenges and the impact of digital transformation in the banking sector, outlining new business models and opportunities. The ‘Fujitsu Future Insights Digital Transformation of Banking Services’ report lays out a vision of future banking services that have moved to digital, based on examples of successful digital transformation in the banking sector using cutting-edge technology. It also proposes business models aimed at expanding business for both existing banks and companies that are new to the industry. Fujitsu Future Insights is to provide deeper analysis of the current state and global trends in digital transformation, of issues raised by transformations in specific fields, and of the impact of technology, in order to deliver proposed strategies and future scenarios for various fields. Beginning with “Digital Transformation of Banking Services” and “Fujitsu Future Insights Global Digital Transformation Survey Report 2018,” Fujitsu plans to continue publishing content under the “Fujitsu Future Insights” title, thereby enhancing its efforts as a partner to its customers in digital transformation.
Summary of the Report
1. Digital Transformation and the Banking Industry
According to the annual Global Digital Transformation Survey conducted by Fujitsu, the shift to digital in the financial sector is the most advanced compared to other industries, with approximately 90% of financial services companies which responded to the survey having started their digital transformations. About 30% of projects in such companies are already achieving results. In addition, alongside the development of digital technology, there has been an increasing trend of companies from a variety of industries-including startups with cutting-edge digital technology, retail and distribution companies, as well as communications companies-entering the banking business, providing functions that had been previously handled by banks, in an effort to create new value.
2. New Banking Services Created Through Digital Transformation
By analyzing the current state of the banking sector as laid out above, Fujitsu has identified five trends as part of its future vision of digital banking services.
(1) Engagement Banking
Adding banking services to the services people use in their daily lives and businesses
(2) Platform Banking
Providing flexible, low-cost banking functions to companies that provide front-end financial services
(3) Technology Banking
Significantly transforming the operational processes of banks through cutting-edge technology, mainly AI
(4) Social Banking
Supporting new economic activities directly connecting individuals in the sharing economy through the use of blockchain technology
(5) Inclusive Banking
Providing financial services to economically challenged people who have not had the opportunity to access financial services
3. Transformation of the Banking Business
For traditional banks, this offers an important opportunity to use digital technology to transform their business model. It is likely that banking business models will specialize into one of the following three types.
(1) A business model in which banks, without changing their existing business significantly, use digital technology to increase customer experience, value and convenience, providing more efficient services.
(2) A business model specializing in back-end services, providing the functionality and operational services essential for the banking business as a platform function through APIs.
(3) A business model specializing in providing front-end services in close connection with customers, utilizing digital channels and physical branches, while procuring back-end platform functions from other banks.
A flexible strategy will be important for companies newly entering the market, such as developing and delivering banking services focused on the company’s areas of strength while procuring the necessary banking functions through an API platform from a bank specialized in providing back-end services.
To maximize business opportunities driven by digital transformation co-creation with a trusted partner is indispensable. Fujitsu is contributing to the co-creation of new banking services by providing an industry platform aimed at financial services through APIs, and by continually developing and deploying cutting-edge technologies such as AI, IoT, Security, and Blockchain.