62 / 2024-04-18 10:40:11

Envisioning the Next-Generation Banking Service System: A Model for Innovative Digital Transformation of Banking Front-End Operations and Services

Supply Chain Finance, Supply Chain Management, China

The pandemic resulted in a profound and far-reaching impact, ushering the world into an era characterised by isolation, despondency, and widespread devastation. Its adverse effects reverberated across the global economic landscape, impeding international trade and investment, and casting long-lasting shadows over various industries worldwide. Among the enduring repercussions and perhaps the most conspicuous, is the erosion of confidence and the waning enthusiasm for active engagement in innovative value-creation endeavours.

On the contrary, in some sectors, the turbulence stemming from the pandemic compelled a radical transformation of consumer behaviours, unexpectedly presenting new opportunities for enhancement and innovation. One such industry that experienced this transformative shift is the banking sector in China.

Illustratively, within the Chinese context, a fundamental value known as “Jian Mian Qing 见面情” assumes great significance, and its direct translation into English is ‘the affection experienced when meeting face-to-face’. This concept encapsulates the synergy forged when individuals convene face-to-face. Historically, the Chinese banking landscape had firmly adhered to the “Jian Mian Qing” ethos, with customers preferring physical branch visits for their financial transactions and pivotal decisions. However, the pandemic rendered this ‘face-to-face’ banking service laden with risk, ultimately causing it to be impractical during times of isolation. Consequently, individuals reluctantly turned to internet banking, phone banking, and various automated services that lacked the human warmth and personalised touch of in-person interactions.

As the pandemic compelled a prolonged reliance on these digital alternatives, both digital natives and digital immigrants found themselves adopting  mobile and remote banking services. This shift in behaviours and preferences, predominantly influenced by the pandemic, has significantly weakened the resistance to non-‘in-person’ banking services, including automated, web-based, digital, mobile, and remote options.

Amidst this transformative trend, novel challenges have arisen, as supplementary online and mobile services have now evolved into indispensable offerings equal to those  of the physical branch. What was once merely a qualifier of service quality has morphed into the determinant of excellence.

This enduring trend has simultaneously engendered enormous opportunities for banks to innovate, compelling them to partake in a fresh industry competition cycle. Amidst this new phase of the post-pandemic banking competitive landscape, several pivotal themes have emerged , including digital transformation, the interplay between architectural innovation versus disruptive innovation, sustainability, inclusiveness, the ascendancy of hubification and platformisation, the leverage and integration of hybrid solutions, and empowerment paradigm.

This exploratory study employs the grounded theory methodology to investigate and examine a conceptual spectrum spanning from ubiquitous banking and mobile banking to remote banking, branchless banking, neobanking, cloud banking and of meta banking. The overarching objective is to establish a foundational set of concepts and theories for constructing, describing, and outlining the rudiments of the forthcoming generation of front-end operational banking systems. This envisioned system is conceived as a hybrid amalgamation of mechanisation and human agency, which is an integrative, ubiquitous, empowering, collaborative, and intelligent banking service system. Furthermore, a complementary model will be devised to enhance these theoretical constructs.

The theoretical underpinning forged by this inquiry will not only elucidate the evolving trajectory of the banking system but also illuminate the future of banking system iterations and innovative digital transformations within the industry.