Since time immemorial, economists have maintained that a nation’s progress is hugely dependent on its ability to maintain a stable economy and relentless efforts in discovering ways to boost the economy at the grass-root levels. For fulfilling this dream of being crowned as a developed nation, we cannot ignore the role of banks.
While banks have done a commendable job in fulfilling their traditional role, the challenge is now to reinvent their ways of working to suit the needs of a rapidly growing digital society. As society gradually transitions from the traditional banking system to the digital banking system, the term Digital Twin Technology was introduced to the world.
Let us now understand what Digital Twin Technology means and how it has the power to revolutionize the banking sector.
Definition of Digital Twin Technology
As the name suggests, Digital Twin Technology refers to creating a virtual twin. Digital Twin Technology enables us to create a virtual representation of a real-life entity or system. Digital Twins combine Artificial Intelligence (AI), the Internet of Things (IoT), and Analytics to monitor and simulate the real world. The idea is to use the twin to simulate real-world conditions and explore the what-ifs.
The implementation of Digital Twin Technology can be compared to the method of conducting experiments on the guinea pig in the lab and replicating the same in the real world only if it yields satisfactory results.
How Can The Implementation Of Digital Twin Technology Revolutionize The Banking Sector?
The use of Digital Twins is already common in several vertical sectors. While manufacturers use Digital Twins as tools to optimize value chains, healthcare industries create Digital Twins of various organs to facilitate clinical diagnosis and medical research. If we focus specifically on the banking sector, it is no surprise that the entire sector is facing intense competition and data explosion, which requires innovative ways of management. This is exactly where Digital Twin Technology can help to a great extent.
In most areas of banking, Digital Twinning can be utilized to predict the success rate of a project before it is launched in the market. Digital Twinning might be useful in the area of acquisition or in cross-selling an existing product into a new market. This could help a great deal in boosting productivity and streamlining the entire process from initiation to the final launch.
In asset management and capital markets, the Digital Twin Technology can be used to test the customer response to a product before its launch. An understanding of the market helps in gathering valuable information regarding customer interests, which can be utilized to build a better product in the future. Digital Twin Technology can also be used to evaluate the effect of different market conditions on future projects. This helps the banks in analyzing the conditions well in advance before investing in risky projects and hence ensures that funds are utilized in the best possible manner.
Some banks are now experimenting with creating digital households to explore various lending outcomes. This helps the banks in predicting the risk factors while lending to potential clients. Digital Twinning can also help in predicting the behavior of the client if there is a sudden fluctuation in the market which helps the bank to get an idea of the potential client can cope with sudden changes in the market and return the borrowed amount safely.
A Digital Twin can be made not just of a process or a location, but also of an individual. Thus, a Digital Twin of an employee or a group of employees can help to get an idea about how certain changes in work-related policies affect the attitude of the employees towards the organization. This proves instrumental in getting a deeper insight into the mindset of the engaged workforce, who play a pivotal role in the long-term success of an organization.
Future of Digital Twin Technology
The concept of Digital Twin Technology is not entirely new, but with advances in Machine Learning and Artificial Intelligence, this technology has become way more manageable. With cheaper and reliable computing infrastructure now available, Digital Twin Technology can be successfully implemented by organizations of all sizes. Industries are now looking at Digital Twin Technology as a one-time investment plan that promises guaranteed returns to the future.
As the world steps into the digital age and the banks are tasked with managing unimaginable amounts of data every single day, switching to a dependable tool like the Digital Twin Technology seems like an obvious choice. Digital Twin Technology, if used effectively, has the power to transform the banking sector in unbelievable ways.
The digital age comes with its own unique set of challenges and hence requires innovative ways to overcome them. It is now time to move away from traditional practices and invest in new-age technologies to ensure that the objectives of the organization are met in the best possible manner.