How is Innovation Changing the Banking Industry?

Currently, the banking world is facing challenges triggered by technological developments and high consumer expectations, so that banks need digital innovation. A new wave of technologies, such as blockchain, API (Application Programming Interface), until robo-advice revolutionizing the way we manage, control and distribute money. We do not need to come to the bank to make transactions. Simply by using the mobile banking application via smartphone, we have been able to carry out various banking activities.

Almost every area of ​​the financial industry feels disruption by this new technology, thus forcing the traditional banking sector to evaluate and invest in digital innovation. This change is expected to be able to break the classic assumption that banking is a rigid industry because of the tight system and regulations.

The change in the way the banking business goes digital is also driven by the emergence of financial technology startups or known as fintech. Growth fintech encourage the banking industry to be agile in transformation.

Key Factors in Digital Banking Transformation

Digital banking is considered to be a new way of doing business mainly thanks to its potential to save costs. Banks should see that this is not just digitizing existing products, but changing mindsets and solutions to become digital according to the behavior and needs of the community.

As stated by the Indonesian Fintech Association, there are three main factors in the digital banking transformation agenda, namely:

1. Gradually leaving the pile of paper as the main process of banking and adopting new, smarter ways. It requires a rethink of the technology architecture, which is certainly very challenging for a large institution that has been in the making for 30 to 50 years. Another challenge related to changing all processes with the support of interface programming applications (Application Programming Interface/API) and its integration with other applications.
2. Banks need to put themselves on the customer's side and transform the consumer experience to be more than just automation.
3. The most challenging is instilling a new culture within the company. Strict regulations in banking sometimes limit creativity. Improvements can be made starting from the application of the concept open office to create a sense of collaboration. Ways of employee culture that smart casual  stimulate a dynamic and open-minded work style. The bank is now designing a training series to prepare employees to work agilely (agility) which covers topics around technology, social media, APIs, digital marketing and information technology security. Everything is packaged in a digital application that can be accessed anywhere.

In addition to the three main keys above, collaboration between banking and fintech become essential in the success of the transformation. To stimulate the birth of ideas and innovations in financial technology, banks have established several programs such as the Finhacks which was initiated by PT. Bank Central Asia (BCA).

Finhacks (Financial Hackathon) is a program armed with the latest ideas and collaboration between industry players and IT developers. Through this Finhacks, it is hoped that there will be digital innovations that are solutions for the financial world, especially banking. Finhacks itself has been held since 2016. Finhacks has successfully captured nearly 500 innovative IT developer ideas throughout Indonesia and produced payment system innovations using e-wallet.

If last year the theme was #HackByTheBeach with a seaside atmosphere, Finhacks 2017 This theme carries the theme #Codescape with a mountainous feel which will take place at the BCA Learning Institute, Sentul. Before heading to the 2017 Finhacks event, BCA and DailySocial will first hold a meetup and a Mini Finhacks. The 2017 Finhacks event prepared a total cash prize of 120 million Rupiah for the three main winning teams who could present solutions related to digital banking.

Through Finhacks 2017, BCA invites IT developers or practitioners to collaborate and compete to produce innovations that can answer challenges. It is hoped that innovation in banking service technology will be easier, safer, and more enjoyable for customers' daily lifestyles.

- Disclosure: This article is an advertorial as a collaboration between BCA and DailySocial as part of a series of activities Finhacks 2017.