Digitization of the financial system

Times are changing, and with them, the models of society and life established so far are forced to evolve through new types of development, regardless of the sector, although some will always be more affected than others. Since the appearance of the Internet and electronic commerce, but especially in the last decade, we have been immersed in a technological revolution that surrounds everything, disruption being a constant in various production processes, so that many models are moved and even disappeared. companies that have already succeeded. To this must be added the flourishing robotization and the application of artificial intelligence, which will also affect the entire productive fabric.

This digital transformation is no open secret, as there are more and more routine procedures we perform digitally, accelerating exponentially with the forced adoption of the pandemic. However, Is the general population ready to adapt to the rate at which companies are digitizing their processes? One sector that has put the accelerator on its digital transformation is traditional banking, which with the pandemic has found the perfect excuse to finish digitizing its most senior audience.

Howeveralthough these processes are designed to be adopted by all types of users, not all have the same technological skills, a phenomenon experienced mainly by the elderly. There are more and more people of 3rd and 4th age who are overwhelmed when it comes to carrying out any activity within their traditional banking entity, therefore feeling, to a certain extent, neglected given the their rights to access a service. In the context of zero interest rates that we have experienced since the Great Financial Crisis, beyond bank mergers to gain efficiency, in order to be profitable and competitive, more than 50% of bank branches have been closed and it remains the EU country with the highest density (45.5 branches per 100,000 inhabitants), which still has a long way to go. On the other hand, according to the report: “Digital transition and transformation of banking in Spain under the impetus of COVID-19”, by KPMG, between 2020 and 2021 more than 3,000 branches were closedlocated mainly in rural areas, known as Emptied Spain, a fact that the Bank of Spain describes as a situation of “cash access vulnerability”; although more and more, cash is in disuse due to the replacement of payment by mobile phone, cards, bizum, etc… there are segments of the population who continue to prefer it.

In more urban areas, the situation of the elderly is improving, although slightly. Considering the scenario we find ourselves in, we have to understand that many of these people are completely alone, with no one to help them with these procedures, or they just like to feel independent. Age should not be an obstacle for the most vulnerable people to continue to exercise any kind of care as they have been doing until now.. This KPMG report also reveals that due to the circumstances of the pandemic, the traditional bank has managed to digitize 50-60% of its customers so far, so almost half are still not making transactions. in line.

On the other hand, if we take into account the data of the National Institute of Statistics (INE), The Spanish population aged 65 to 74 does not use the Internet or uses it very little. Therefore, considering that this segment of the population (23% of the total) does not have access to the Internet, why do companies continue to implement telematics processes in essential activities? How can he withdraw money, make a transfer, pay a bill…

For some transactional areas (digital means of payment, investment portfolio management, securities brokers, insurance contracts, among others), there are already specialized companies that offer a better user experience than the bank, for example, numerous fintechwhich represent an essential asset in the innovation of the financial sector.

To our knowledge, businesses must balance the status quo with digital evolution. We must not remove from our lives what we continue to consider current – until it is no longer so for future generations – just to keep pace with the digital age. Giving course to certain needs, rather than adding, subtracting. The ideal would be to combine and/or supplement the tools we are used to with new technological options, so that the population can adapt as well as possible, whatever their age.


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Don F. Davis