Digitization Rewrites The Rules Of Competition
The dramatic digital advancement impacting every sector of the economy has spoilt the customer with instant and easy access to information, products and services. Digitization coupled with a ‘customer first’ approach of companies has led customers to expect a radical overhaul of business processes. ‘Going Digital’ is more than a marketing strategy; it is a fundamental change in how these sectors learn about, interact with and satisfy their customers. Digital transformation is one of the top trends in major industrial sectors like finance, communication, logistics & supply chain, health, education and transport.
Traditional organizations following the paper and manual modes for their business processes run a huge risk of losing their market, as digitally upgraded players are geared to entice the customer base with rapid delivery of products and services, thereby deploying enhanced systems and processes for day-to-day transactions. There is a fundamental need for companies across sectors to redesign their processes, not merely by virtue of automation but by reducing the number of documents.
Digitization of documents helps organizations to securely store, search and access documents with ease. Digitized documents can be retrieved, updated, shared and transferred with less time, cost and effort than physical documents. Multiple users can view the documents in their original form and format.
McKinsey Global Institute released a report in 2007 that throws some key insights on Indian consumerism. The report states that the Indian income will triple over the next 2 decades and the country’s middle class will grow from about 5 percent of the population to more than 40 percent and create the world’s fifth-largest consumer market. Today 57 percent of private spending is spread across rural areas, but by 2025 cities will command 62 percent of the country’s spending power. In absolute terms, the country’s urban population will expand significantly, from 318 million today to 523 million in 2025.The rise of the urban middle class will greatly impact the financial services.
Role of Digitization across major industries
Banking & Finance: Banks are striving hard to retain old customers by offering an array of different products such as credit cards, insurance products, mutual fund plans, and government securities to existing customers i.e. cross sell. Digitization is the key for cross selling success. Cross selling plays a pivotal role for success in the financial and banking services market. The main aim is to offer a one-stop shop for wide-ranging customers’ financial needs.
When banks want to introduce new products to customers they have to identify and evaluate customers segments that would prove most profitable. Advanced analytics can be done on digitized customer information gathered to provide customers with targeted, just-in-time product or service information in an effective and seamless way. Digitization is the way to optimize efficiencies, reduce costs and serve customers in a consistent way.(Client Results Story from Bain & Company). The knowledge gained from the analyses of the customer can be reused many times as and when required across multiple locations.
Digitization of the KYC (Know Your Customer) documents and other supporting documents is a quick and easy way for successful banks to process account opening or loan processing. Account opening for new customers and processing loan applications for agriculture, buying homes, cars, two wheelers, consumer durables and commercial vehicles and equipment aresome of the most common tasks in a financial institution. Each loan application has a time sensitive lifetime wherein it passes through different phases such as customer document collection, approval from bank, sanction and disbursement. The opening of bank accounts for new customers also follows a similar lifetime.
Scanning and indexing these documents for electronic retrieval offer a more efficient solution than moving paper from desk to desk. Streamlining the flow of documents to only specified people with security and using collaborative electronic sharing accelerates processing loans/account opening.
Logistics and Supply chain: The transport and logistics industry is another sector that greatly benefits from digitizing the information pertaining to shipments. They constantly strive to meet and exceed customer expectations while maintaining costs and meeting regulatory compliance laws. With the majority of information pertaining to shipments still residing in hardcopy documents, it can be difficult to have instant access to information, which can cause delays in customer responsiveness. Moving these hardcopy documents to digital format will help companies stay competitive and meet customer demands effectively.
Globalization and having global suppliers in order to reduce the supply chain cost, product features that are constantly changing, growth of market in home and foreign all creates several challenges for many supply chain companies.
Most organizations operate on hybrid supply chain models that combine paper-based and IT-supported processes. As paper-based information is only available locally, organizational design is largely based on local factories or branches serving local customers. Coordination and governance is based on local profit centers which often do not share information openly with other organizational units and hence applications are designed to support local processes or functional islands. These divergent local processes and IT applications lead to inconsistent and redundant data at the corporate level and create several inefficiencies
Digital supply chains, on the other hand, have the capability for extensive information availability, and enable superior collaboration and communication across digital platforms resulting in improved reliability, agility and effectiveness.
Digitizing the supply chain invoices can help enterprises save time money and resources and prevent broken relationships and supplier turnover. With a digital supply chain, data on all interactions, including invoice timing, approval status and past payments, can be stored for future reference. This eliminates wasted time and money searching for proof of payment. If properly analyzed, these data can also provide unparalleled insights into strengths and weaknesses of your company and its supplier relationships. Digitization also decreases the carbon footprint on the environment and is becoming increasingly important in the business world.
Healthcare: Through digital Healthcare hospitals can reach out to consumers in their natural habitat, become involved in their health, and grow along this path. Congressman Patrick Kennedy remarked “In a digital healthcare system, providers can have the information they need right at the point of care. Computer algorithms can catch mistakes and prompt to ensure consideration of latest scientific developments.” Digitized Health care improves patient care, diagnostics, care coordination and patient outcomes. It increases patient participation and cost savings. (Levingston, S. A. (2012). Opportunities in physician electronic health records: A road map for vendors. Bloomberg Government.)
Another area in which digitization helps is in Check storage, archival and retrieval. Checks can be retrieved and analyzed at any time to settle any disputes, to resolve compliance and to produce before regulatory, statutory and judicial authorities.
CTC (Check truncation) – Digitizing the checks so as to transfer the images over network and effect the clearing in an image server which in effect makes it possible for the beneficiaries to get the funds in the shortest possible time, even maybe on the same day.
Digitization leads to transformational growth in organizations resulting in value delivery to end customers by virtue of benchmarking and sustainability.
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