Rationalization simply means the process of prioritizing digitization. It’s what allows FIs to offer digital solutions at a sensible pace and in a sensible order.
Confusing? Think of it like this:
Opening a checking account is simple. Provide proof of identity and address, fill out a form, and boom—it’s ready to go. Account applications are a digital-ready banking service and would be a priority to move online.
Now, consider applying for a loan. An underwriter needs to carefully evaluate the applicant, which typically involves a mountain of paperwork loaded with long, confusing words and requirements. Well, if that mountain of paperwork is intimidating with the help of a professional, imagine how customers might feel when left to their own (literal) devices.
It’s just not sensible to rush loan processing as a digital solution until it has been improved, so it would be a mistake for FIs to prioritize it.
As Anita Robinson, banking transformation practice at NCR, says, “You can digitize a process, but if the process is already flawed or has lots of friction, all you’re doing is making a bad process faster.” Simply taking an outdated, clunky process and moving it online is a flawed approach. It is irrational (see where we’re going with this?).
Rationalization matters because an estimated 3 billion people will access banking through digital devices in 2021. As the pandemic has been a catalyst for digitization in all industries, the finance sector (which has been slower to adopt when compared with other industries, like retail) has some catching up to do.
“Most banks have thought in terms of a 3, 5, 10+ year plan, but rationalization is thinking of what’s most important now and how to prioritize digital efforts around that,” Robinson says.