The shift to mobile services as the preferred customer channel for banking services leaves banks with questions of how to build a digital banking strategy. Read the trends blog to learn more!
As mobile services continue to outpace traditional in-person visits to branch offices, the banking industry must take steps to meet ever increasing customer demand. Most banking institutions were discussing a digital transformation strategy prior to 2020. However, the sudden demands for remote services caused by the pandemic have made digital capabilities an absolute must for a financial institution’s survival. This extends beyond mobile services and includes investment banking as well.
If you would like to learn more about the impact of digital transformation in banking, read on!
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Digital Transformation in Banking
Roughly speaking, the core objective of digital transformation in banking is to augment customer experience with digital or mobile services. A shift to digital services can reduce cost, improve operational efficiency, all while enhancing agility.
Furthermore, many non-banking companies are leveraging FinTechs in order to provide financial services. For instance, the 2019 launch of the Apple Card – a registered trademark of Apple, but issued by Goldman Sachs — represents are powerful instance of a tech brand claiming a presence in the financial world.
Additionally, cash services are used less often compared to peer-2-peer (P2P) payment methods. To remain viable, banks must not only leverage the latest digital tools but consider how new capabilities will fit into an institution’s business goals and long term transformation strategy.
The digital transformation was already disrupting traditional business models well before 2020, but the pandemic has prompted a surge in customer demand for digital services unlike anything the financial industry has ever witnessed before. With new innovations emerging every day, the clear customer preference for mobile applications and digital financial services has highlighted outdated practices. Banks and credit unions must remap their customer journey to accommodate for a new operational model that works to meet customers through their desired channels.
Want to learn how agile squads can help build your digital transformation roadmap? Click here!
What is Digital Banking?
The transformation from traditional to digital banking is the result of a shift from customer usage of services through physical branch office to a customer preference for digital and mobile services. The modern banking customer demands innovative, technology-driven products and services, from one-click loans to universal payment systems. But rather than simply purchasing the latest tech, banks must examine their priorities and consider how digital capabilities may redefine their larger goals to meet business customer demands.
Making innovation a defining feature of business culture means digital talents must be strengthened before agile execution is possible. Equipping the workforce is often the first step toward creating a system that actively responds to continual feedback with real-time collaboration in order to create an exceptional user experience.
Additionally, effective mobile services require much more than a well-designed mobile application. At all stages, new solutions must be designed with the user experience in mind. Enabling the right capabilities involves a balance between new features and customer needs. All interactions, from an ATM withdrawal to in-person financial advising, must be designed to strengthen customer satisfaction and deepen the relationship between the institution and the individual.
Want learn how core banking applications enable real-time banking operations? Click here.
Building a Digital Banking Strategy
While transformation strategies need to address the unique concerns of each financial institution, there are key principles that can guide the planning process:
- Defining Business Goals and Pain Points
Especially in early stages, it can be difficult to see the benefits of digital banking transformation. More than simply delivering the parallel products and services through an app, successful digital banking transformation calls for a redesign in the operational model, all while legacy systems are transitioned to new platforms. In particular, the modernization of legacy systems can prove to be a slow process with unique demands that differ for each organization.
Depending on a financial institution’s objectives and anticipated business needs, transition typically involves the integration of mobile technologies, data analytics tools, cloud computing, cybersecurity, etc. The goal is to build a flexible infrastructure that can support existing needs while providing space for future innovations.
This process essentially transforms how employees, customers, and trading partners communicate and work together. Encouraging successful collaboration between your workforce and customer base demands a careful examination of how and where they interact. Employees are most likely to engage in digital environments when they know that they are equipped to have a meaningful effect on the customer’s concerns. Creating synergy between human capital and digital resources involves having a detailed overview of what tools make effective customer service possible and finding the digital tools that meet tangible needs.
- Hybrid Delivery: Digital Banking Services and Physical Touch Points
The shift toward mobile services serves as the first time that large banks have been able to provide higher customer satisfaction when compared to smaller banks. Consequently, investment in digital channels, especially mobile channels, has a direct impact on a bank’s ability to grow its customer base.
Banks and credit unions that provide a user-friendly and efficient online banking service or mobile banking app have a substantial competitive advantage and are more likely to attract new customers and retain higher active account numbers while boosting satisfaction. Improved functionality has a direct impact on customer satisfaction and contributes to marketplace differentiation.
This shift demands that banks redefine the role of physical branch offices to support a digital customer journey, from account opening, to requesting a replacement credit card, to long term financial support. Even before the pandemic, customers displayed a clear preference for accessing services (checking account information, bill pay, etc.) through a mobile device.
However, branch office visits still represented a significant portion of how customer got their banking done. A potential solution here to move to a hybrid model, moving human resources away from traditional banking services and finding new ways to implement employees as part of digital solutions. For instance, many companies are beginning to offer omnichannel customer support that allows either agents or virtual assistants to connect with customers through whatever channel they prefer, (i.e. social media or email address).
- Tools That Shape a Digital Banking Platform
A key technology that has driven digital transformation is artificial intelligence. Uses in the banking industry range from virtual assistants or chat bots that help customers manage or change their credentials (login id, or passwords), to advanced analytics tools that provide real time insights into customer experience or security concerns. These tools can provide powerful advantage when considering the massive amount of information that digital banking generates. Having AI tools that can turn big data into actionable insights is vital to creating agility while keeping accounts secure.
The collection and enablement analytics tools across an organization’s data creates more opportunities for cohesive experience. Whether online or in person, integrating existing systems into a unified whole helps when building out knowledge bases for employees and customers alike.
Want to learn how AI can transform digital banking? Click here to read more!
Advantages of Enacting Digital Transformation in Banking with Stefanini
For Financial institutions today, creating a comprehensive roadmap for digital transformation is necessary for survival. Stefanini stands at the forefront of digital technology and boasts 30 years of experience with banking clients. Our team of experts are uniquely positioned to assist financial institutions in implementing digital transformation.
We take a customer-first approach to everything we do, analyzing your pain points and business objectives to co-create a solution custom fit for you. Ready to bring your financial institution into the future? Give us a call today!
