Customer expectations are constantly evolving and to meet and even exceed these expectations, banks are aware that undertaking a successful digital transformation journey is no more a nice-to-have thing but a business imperative.
Banks (especially large ones) have lagged in digital transformation compared to other industries because of their size, complexity, and their legacy experiences & systems. All that is slowly but steadily changing as banks are ramping up their digital readiness by infusing heavy investments on digital, on-demand experiences.
The need of the hour is for banks to focus on meeting customers where they are because customers of today are digital natives (they use mobile). It is all about banks providing products & services customers expect at their time and convenience.
Banks are fast realizing how embracing ‘Digital Transformation’ can help them become more agile and responsive to customer needs, improve their efficiency as well as reduce costs. ‘Digital Transformation’ can be the enabler for banks to automate tasks currently done manually, thus freeing up their staff to prioritize more important tasks.
Although banks have started walking down the Digital Transformation road, they are still struggling to keep pace up with rising customer demands.
Let us try to understand how banks can undertake a successful Digital Transformation journey.
Cultural Shift Right from the Top Management
A cultural shift is not just about a CEO saying ‘we need to transform’ – it requires an organizational commitment that goes right down to the deepest levels, including earmarking budget for technical funding, talent acquisition & development, developing agile workflows, willingness to take risks (the budget to back it up) and facilitating distributed decision-making empowering team members (including lower-level team members) to make decisions as well. However, empowering lower-level team members to make decisions can be challenging because most decision-making is centralized at the top and having leaders give up decision-making is easier said than done. It is critical for banks to recruit, develop and retain talent, who know how to make the right decisions and can thrive in agile environments, which would go a long way in making lower-level decision making successful.
Customer-First Approach
Banks need to adopt a customer-first approach to be a winner in this hyper-competitive marketplace - they need to rejig their aging, legacy infrastructures before they fall behind in competition. Banks must build a deeper understanding of what the customer is looking for and ensure a seamless service delivery, high-end-user experience, personalized product experience, transparency, and security.
Banks need to drive change in operating procedures, introduce digital platforms across service offerings, enhance customer interaction procedures – all these can boost customer engagement - the key driver of any business success.
Unlocking data silos
Banks grapple with older software systems that were built without data integration in mind, keeping customers’ financial data in silos that cannot easily be accessed outside the company. And that’s important because people increasingly expect their money to be available instantly, everywhere. Customers may want to use apps like Coinbase to buy cryptocurrency and Venmo to send money to their friends. If a bank cannot connect to those apps, customers will think of switching to their competitors.
And to make data more accessible and enable better online experiences, banks should invest in a centralized data-linking system. These systems pull diverse types of financial data (such as account balances, recent transactions, etc) and assemble it into a unified platform that can be used to generate personalized insights or build value-added products.
Forging Data Partnerships
Internal data of banks is valuable, but it does not provide a full picture of customers’ financial lives. Banks need to access permissioned data from financial accounts they hold elsewhere to offer the best products and services. Of course, accessing permissioned consumer financial data from outside banks was difficult or impossible until recently. However, over the last ten years, a slew of technology companies such as Plaid, Yodlee, MX, and Finicity has emerged to offer such services. Customers can select their outside bank and enter the username and password associated with those accounts.
Forging data partnerships can help banks reveal the totality of a customers’ financial life, providing them with the ability to build products and services that speak to their unique goals and challenges. For instance, helping them refinance their mortgage at a lower rate or offering targeted savings tips.
Prioritizing Recruiting Technical Talent
Banks must not overlook the fact that technical talent is critical to digital transformation as without it they cannot build cutting-edge experiences that customers increasingly expect. Hiring high-performing product managers, designers, and software engineers starts with building an innovative company culture. One key reason tech companies such as Google, Apple, and Amazon have been so successful in recruiting the best technical talent is because they inspire their workers: such talents are driven by an ‘innovation culture’ that is built around tackling the world’s hardest problems and creating leading-edge products.
Continuous Improvement
Banks must build a seamless and innovative delivery pipeline based on agile principles to achieve continuous improvement. Building an effective pipeline can help banks easily track changing market trends, test out innovative products, and put fast feedback mechanisms in place to iterate products for enhancements. This contributes to on-demand service delivery, continuous innovation, and continuous improvement, resulting in accelerated time-to-market.
Modernizing Legacy Infrastructure
Banks should know that achieving Digital Transformation is not just about introducing digital transformation technologies. Banks must modernize their legacy infrastructure to support digital transformation strategies since the underlying infrastructure has a critical role to play in facilitating the information flow that is key to the front-end digital transformation journey.
With the world becoming increasingly interconnected given the digital transformation strategies which have fostered digital innovation, change is happening at a faster clip than ever before. Microservice architecture, APIs, and DevOps can be helpful for continuous integration and delivery, resulting in shorter release cycles.
Harnessing the Power of Data
Banks must harness the power of data and related tools & resources in driving business success. They should implement data analytics practices to understand and monitor customer thinking patterns, which can help produce the most relevant products that match customer needs. Leveraging data can enable banks to gain key market insights that can further assist them in enhancing product offerings, & experience and deepening customer relationships.
Conclusion
There is no doubt that Digital Transformation is one of the most important initiatives that banks need to embrace to remain relevant and competitive. Delivering an exceptional customer experience is the focus area of banks and taking the Digital Transformation route can help banks achieve their objective of driving high customer satisfaction across multiple channels, resulting in increased profitability and customer loyalty.
