Why Banks Must Adopt Digital, Wisely

by Greg Ng 0

Digital Darwinism — the idea that technology and society are evolving faster than businesses can naturally adapt — is the most imminent threat to every institution in the financial sector today. But, while this may be dismal, digital success is not unattainable.

In recent years, avant-garde banks have begun investing large sums of capital into digital solutions to develop innovative omnichannel tactics that can reach across broadening consumer touchpoints. And, while ‘digital transformation’ and ‘user experience (UX)’ have been topics dominating the headlines, it’s still unclear whether the majority of financial institutions truly grasp the value generated through digital innovation, or if they are simply following in the footsteps of renowned industry players and trail of buzzword analysis.

In fact, according the State of the Mobile Experience Report, finance leaders believe their customer’s biggest pain points are completing basic day-to-day banking tasks, such as making deposits, paying bills, etc. (56 percent), and accessing personal financial information in real time (53 percent). How can banks retain users if they can’t get the basics down? Financial institutions would benefit from digital solutions that seamlessly merge technology, banking and usability.

Why Banks Must Adopt Digital

With widespread adoption of digital and peer-to-peer payment apps such as Venmo, it’s no surprise that consumers are demanding digital offerings from the financial sector. And with some banks swapping PINS for selfies, it seems the possibilities are endless.

Finance leaders would be wise to meet these growing consumer demands for innovative technologies, but must also keep best business practices in mind. Banking leaders must realize that consumers aren’t demanding that providers adopt every new tech gadget and functionality, they simply want easily accessible, relevant information and an elegant navigation experience — at the bare minimum.

Successful organizations are those that employ a digital transformation experience with the intent of streamlining processes, increasing operational agility, and constructing personalized features that optimize the customer experience.

Improve Internal Efficiencies

Digital banking leaders recognize that implementing even the most cutting-edge technology alone isn’t an immediate ticket to ride the wave of disruption. They invest a substantial amount of time and resources into cultural transformation to empower employees and enable a smooth transition to a responsive, adaptable workforce.

To truly implement an effective digital transformation, a general consensus must be established across key internal stakeholders that extends across all departments. Processes that encourage cross-team collaboration and that align with modern design patterns and channels must also be implemented to achieve positive outcomes.

Simply put, the value of digital culture must be personified at the leadership level, and employees should be adequately supported as the institution adapts to its new operations.

Digital innovation is forging a fundamental cultural shift from product-centricity to client-centricity. This means leadership must empower employees to be forward-thinking and open to new practices, services and technologies. A successful cultural transformation requires a C-suite that can assemble an internal and external digital agenda while establishing an inclusive environment for employees who may not be digital natives.

Meet Consumer Demands

The arms race to perfect the digital journey has created a highly competitive landscape and has also induced enormous demand for banks to achieve an optimal user experience.

The most resilient banks are those that generate a unique value that resonates with consumers and that proves itself inimitable by competitors. By developing front-end architecture that is intuitive to navigate, frictionless to use, and customized to a customer’s previous interactions, banking leaders can ensure they are offering an exceptional experience. Banks that do so will be rewarded with a wealth of successful KPI’s, including increased customer satisfaction, revenue, loyalty, retention, and engagement.

In addition to this, fueled by advancements in cloud technology, artificial intelligence (AI), and Big Data, leading traditional banks are also using consumer behavior history to develop highly personalized experiences. Most large banks possess mainframes that can manage this immense data, while smaller institutions must automate these processes to prepare unstructured data for analysis and decision-making. Providing the personalization that consumers have come to expect is crucial to building meaningful relationships and ensuring loyalty.

Where to Start? The Transformation Roadmap

While some banks are bold enough to invest upwards of $1 Billion for an entire digital overhaul, their less audacious counterparts will apply lightweight integration in order to test and refine each new functionality. In any event, executives must determine their commitment upfront and decide whether digital transformation will simply be an ongoing set of projects or if it something they value enough to be at the core of company values.

Digitizing processes means constructing a scalable architecture where both customer facing and enterprise-user facing elements are aligned and flexible. Many banks continue to invest heavily in improving the customer-facing layer, meanwhile the CRM and back-office processes rely on legacy systems deemed antiquated by more adaptive competitors. Modernizing the digital experience is key to driving engagement and providing relevant offers to customers in real-time.

Technology is only going to become more and more innovative. As consumers heighten their expectations of integrated technologies, such as AI, it will continue to transform the finance and banking industries. It’s imperative that banks ensure that stakeholders share the same desired goals, and that all internal business processes are properly restructured to prepare themselves to not only face present challenges, but also be open to future innovations.