Digital Transformation in Banking as a Strategic Imperative

Abstract

The term "digital transformation" has become common in every type of business. When talking about
digital transformation, it is not just about technology, but about a tool that changes the way through which it is
possible to do better business. Successful digital transformation strategies must go beyond simple application of
technology. Digital transformation should influence cultural changes that move employees' ways of thinking, as a way
that they continuously contribute to and enhance this transformation. The digital transformation in financial services
began with the digitization of monthly reports, in a way that everything took place without paper. Since then, financial
institutions have further enhanced their offer to customers both in depth and breadth through the digital delivery
channel. What is crucial to the growth and competitiveness of banks in the future lies in the ability of traditional
financial institutions to acquire new customers, while online and mobile applications are the basis for increasing the
customer base and improving cross-selling efficiency. Expanding the overall digital opportunities in banking is at the
top of the list of priorities, although traditional delivery options, branches, will continue to exist with the need to be
upgraded. The key is that all distribution channels have to be flawless in delivering products and services, and that
they all focus on delivery. The subject of the research in the paper is traditional banking operations and the urgent
need for digitization, conditioned primarily by technology competitors that have great potential to make radical
changes in the entire financial sector, so-called fin-tech companies. New players appeared in the provision of payment
services, card and micro finance, with aggressive pricing policy and simple user experience. Financial institutions of
all sizes must seriously work on the continuous improvement of their digital maturity, which presupposes investing in
processes in bacophyses and infrastructure, unlike tactical projects related to front oficces, which only affect the
experience of consumers at the surface level. The aim of the research is to point out that ?nly by investing in the
digital functionality in a traditional banking institution will it be able to keep up with finite companies and other major
technological alternatives. What's more important than ever is for banks to catch up their growing digital competition
with their future digital strategies. Partnership with fin-tech companies enables banks to develop strategies to
maximize customer growth and thus retain the advantage they have in front of the competition, both from the largest
international banks and from technological giants such as Amazon and Google. As banks plan to continuously expand
their client base, they must take into account the impact of digital banking on the spill-over of various types of services
through self-service and automation in any banking business. The basic challenge of traditional banks is to find the
ideal balance between financial regulation and financial innovation, i.e. between market stability and efficiency. It is
obvious that in the future there will be no slowing down of changes, and vice versa, banks that do not work on
continuous improvement and implementation of digital strategies will not be in a position to meet the needs and
expectations of consumers. The methods used in the paper primarily relate to the analysis of the content of the relevant
research, with the expectation that the results of the research will confirm the initial hypothesis that digitization of the
banking sector is a strategic imperative for the development of banks.