Talking to… João Quelhas about digital transformation in the banking industry

João Quelhas started at LOQR in August 2021 as a Business Strategy Analyst. He is currently working on his master’s thesis and will graduate in Economics at Nova School of Business and Economics in January 2022.  One of his main interests is the digital transformation of the banking industry and its impact on the economy, and the topic of this conversation.

João, why did you choose to talk about digital transformation in the banking industry?

We are currently entering a new digital era, and this means that traditional businesses will need to redefine their processes aiming to embrace the new technologies. This will have an extraordinary impact on the banking industry and, therefore, on everyone’s life.

Nowadays, there are at least two very distinct types of players in the banking ecosystem. On one side, we have traditional large-scale banks, which are in the business for decades and have significant customer networks. These have well-structured processes and face several constraints in their business, as such legal frameworks, so they are not able to easily disrupt the way they operate and reshape how they serve their customers.

On the other side, emergent digital players, fintechs, and innovative startups are erupting in the market with innovative solutions that bring a huge leap in terms of digitalization and technology developments. These benefit from some flexibility and independence and, therefore, are more adaptable to an ever-changing world.

This means that there will be an exciting interplay between both sides, in the sense that the new solutions from the smaller players will challenge the big banks to digitalize their solutions and to embrace a journey of working with each other to up-scale their businesses. This trend has been triggered by the COVID-19 pandemic and will develop further in the next years.

Can you tell us more about the process of banking digital transition?

The digital shift in the banking industry has emerged because of, among others, the following key drivers:

• New legal frameworks have been setting a path to the adoption of technological solutions such as digital onboarding to increase customer safety, increase compliance with KYC and AML compliance and reduce the fraud rate.
• Due to more intense competition, banks are innovating themselves by investing in technological developments to improve customer experiences.
• The significant growth of the e-commerce segment is pushing the growth in the digital ecosystem, and this means that the infrastructure to provide a quick and effective payment procedure gained relevance in the ecosystem.
• Covid-19 is the main trigger of the change in consumer behavior as the preference for digital payments over cash rose significantly during the pandemic and now consumers expect banks to provide digital journeys instead of the traditional brick & mortar approach, leveraging their branches as the main touchpoint.

In fact, stricter financial regulations, the democratization of financial markets, the increase in client sophistication, and the rapid advance in technology mean that banks will need to adapt to a new reality and rethink their role in this new ecosystem. They will need to work with digital challengers and upscale their offer with innovative solutions.

As an example of this shift, LOQR has recently been exploring the Turkish market where 97% of the people already expect that opening a financial account can be done digitally or 68% expect that they can access a personal loan remotely. Turkey has recently adopted a legal framework stating that video identification is the primary remote identification of customers method during digital onboarding, however, only four of the top 10 banks (in terms of total assets as of 31 December 2021) are implementing a fully digital onboarding experience. This shows that the stated drivers are already in place and very soon the digital transition will take place in Turkey.

If you are interested in this topic, LOQR will host an insightful conversation about Digital Onboarding in the Turkish Banking Sector and explain how LOQR can help in this transition on the 30th of September 2021. You can register at this link.

Do you believe that LOQR has a crucial role in the process?

LOQR has a special role in this transition as it is an SME on AI and compliance with the mission of helping clients to empower their customers’ digital lives through certified turn-key journeys that are regulatory compliant and part of an end-to-end platform. LOQR presents a white-label modular digital platform where it can “plug” different banking and beyond-banking journeys such as online account opening, customer data update, proof of life, and others.

LOQR is also constantly trying to improve its journey creator by leveraging its expertise in AI and ML. For these reasons, I strongly believe that LOQR can provide critical support to the banking sector on the path that they will take over the next decade towards digitalization.  

João, if you had to define LOQR in one sentence, which would it be?

LOQR is transforming the way that the digital economy works by “Empowering Digital Lives”, and I believe that in the next years it will have a valuable role in everyone’s life.