7 Tips to Make Digital Banking Transformation Successful

Modernizing legacy systems doesn’t occur overnight. It’s an incremental process that varies for every organization, contingent on its anticipated needs and target goals. For many organizations in the financial industry, this means integrating advanced analytics, mobile technologies, cloud computing, cybersecurity, among other things.

The main objective is to develop an efficient and flexible infrastructure. An infrastructure that can cater to the needs of the organization and support future innovations. Besides transforming old technology, it’s also crucial to reevaluate decades-old back-office processes. It includes marketing, sales, product development, product delivery, and customer service.

Tips to Make Digital Banking Transformation Successful

It’s a must to rethink such processes with the recent technological innovations in mind. If you’re currently on the path toward digital banking transformation, here’s a guide for you.

Trends in Digital Banking

The benefits brought by digital innovations in other industries have significantly influenced the trends in digital banking. People have seen and experienced positive changes in those fields. And they want them implemented in the financial service and banking industry.

Pre-pandemic, many banks were already reevaluating how they will improve the banking experience of consumers. The needs and expectations of customers serve as the catalyst for banks with legacy core systems. It helps to innovate and compete with the fintech firms.

Digital banking trends appear to be reaching not only younger consumers but also older customers. Consumers from every wealth group and age group prefer digital channels when they make transactions. These channels are more convenient and efficient.

Yes, digital banking transformation was already being applied by bank companies, but the Covid-19 crisis has impelled more banks to prioritize digital transformation in their marketing strategies, products, and services.

According to a study, 60% of banks say that they have put their investments in the latest automation technologies. The purpose is to enhance communication with consumers. Moreover, 70% have invested their money in developing improved customer-facing digital experiences.

The trend of using digital channels like social media has proved to be an effective means to strengthen brand loyalty. It reassures consumers during times of uncertainty by giving them updates with important details about their financial and bank accounts.

Pros and Cons of Digital Banking Transformation

Like other innovations in doing business, digital transformation in banking has its pros and cons. Read on below to know about them.

Upsides

• Simplify Management. Digital transformation allows the workforce of financial institutions and their consumers to smoothly manage bank accounts, offline and online. Consumers can directly provide their information or promptly receive assistance from banking representatives online instead of managing paper records. Furthermore, you will eliminate instances of duplicate information because all data stays within the systems.
• Convenience. Online availability of bank accounts enables customers to access such accounts whenever and wherever they are so long as they are connected to the internet. Customers will have the convenience to monitor their bank transactions and manage their data. They change pieces of information such as their phone number without the need to visit their banks.
• 24/7 Accessibility. Going digital enables financial services and banking institutions to provide services 24/7. This 24/7 accessibility improves customer experience since it will reduce the need to go to physical branches of financial institutions and wait in long lines just to make an important transaction. Another positive thing about it is that it will boost the productivity of banking institutions’ staff.

Downsides

• Security Challenges. Banks who undergo digital transformation are compelled to have secure technologies and processes to protect their digital assets as well as their customers’ digital assets. Thus, banking institutions should implement solid security measures to reduce the vulnerability to getting victimized by hackers and prevent security breaches. Of course, tightening digital and online security is not a walk in the park, which means financial institutions have to prepare for challenges along the way.
• Complex Transactions. When it comes to making banking transactions, the idea of fully going digital may just be an idea. People working in the banking industry need to understand that there are complex transactions that require customers to visit their banks due to security and validation purposes.

Tips to Keep in Mind

Here are some tips to keep in mind to increase the chances of success of digital banking transformation.

Provide the Vision

Transforming banking and financial services digitally is hard to achieve without vision. Senior bank executives need to commit to change their respective financial companies radically, and the company’s vision bolsters that commitment.

For digital banking transformation to become successful, there must be a clearly defined strategy, reinforced by the right financing, talent acquisition, receptiveness to agile methods of working, and a readiness to take risks.

Make sure to articulate the importance of digital transformation in banking, and never forget to emphasize its advantages for both employees and consumers. When you persuasively communicate its importance, your employees will get the motivation and purpose to achieve your goals, which will then translate to a better digital experience for customers.

It’s also a must to hear and take note of the concerns and challenges of your workforce while going through the digital transformation process. When your employees have struggled with adapting to these changes, you can find more manageable approaches without abandoning your vision.

Use Digital Channels to Inform and Educate Customers

Since consumers are navigating the constantly changing economy and their financial situations, traditional channels like bank call centers may not hold up to the flood of inquiries from a significant number of consumers. That’s why you must use digital channels to inform, update, and educate customers.

For example, you can answer frequently asked questions of customers by posting important information on your website and social media pages. Digital platforms can also help educate them about digital banking, such as how to download and use your bank’s mobile application, which is essential during this time of the pandemic.

Using videos is also a valuable way to inform consumers who are not that savvy when it comes to technology. You can teach them through video content how to check account balances and transfer money through mobile banking. Online chat or video conferencing also offers a remote way to talk with bank lenders.

With the restrictions on physical and direct interactions with customers, you should find ways to leverage digital platforms to provide service with them remotely. For your customers’ convenience, it’s an excellent idea to make the process of loan applications online or create a customized digital onboarding for new customers.

Indeed, going digital and exploring online platforms to help consumers manage their finances is necessary to become successful in the banking industry today. Failing to keep up with the developments in technology can get you behind the race.

Improve Consumer Experience

The Covid-19 pandemic has brought a significant change to the mindset of many people when it comes to digital technology. Now, we are seeing more folks using digital apps and other online platforms to live through this crisis.

The sophisticated mobile gadgets we have now, the enhanced utilization of data analytics. The latest digital applications have enabled consumers to search for stuff they want and get them in less time and with fewer hassles.

Another observation is that not only that the young people are taking advantage of these new technologies but also the old folks. The latter now make up a significant part of the number of users of these digital solutions.

Using Data and Analytics

It’s essential to harness the humongous amount of data we have today and use analytics and the capabilities of artificial intelligence to provide consumers the experiences they’re looking for.

Integrating big data and analytics with the organization’s operations help personalize engagement with their target audience, enhance security and privacy, and stay ahead of the competition in terms of production and revenue.

Knowing the preferences of consumers and using external sources to provide quick, contextual recommendations are what consumers expect from startups and businesses. The promise of personalization to deliver what consumers need should be one of the focuses of financial institutions.

Consumers look up to their credit unions and banks to use their personal preferences and behaviors. So, make sure to tap consumer data insights to create personalized solutions. Look for the existing challenges and goals in your organization that AI and advanced analytics can solve.

Examples of these are facilitating predictive product/service recommendations, product delivery, and fraud detection. Machine learning — as a component of the advanced analytics process – should be utilized to enhance data interpretation and AI should furnish high-level intelligence across the whole organization.

Foster a Culture of Innovation

Fostering a culture of innovation within a financial institution or company is crucial to digital banking transformation success. Just ask the masterminds and CEOs behind new digital legacy banks and disruptive financial technology firms. They’ll tell you that such culture is highly important.

Moreover, you can observe that companies and firms on the top rung of the digital transformation ladder have innovative leaders. Embracing innovation is essential to keep up with the competition in the banking industry. One of the lessons of the pandemic to financial institutions is to be innovative with the changing times and existing world problems.

Culture, Leadership and the Human Aspect

Yes, modern technology is everywhere, and organizations will harness its potential one way or another. But it’s all about the culture, leadership, and human aspect behind technology and innovation that will most likely drive success for an organization.

From the top to the bottom of the organizational structure, there should be a mindset for innovation to develop and implement the capabilities of the digital technologies we have today to make better consumer experiences and facilitate business efficiency.

Credit unions and banks should start with the needs of the consumers in mind. There should be a diagnostic stage with substantive input from consumers about their expectations before any effort is made – given the fact that consumer expectations are changing by the day.

Don’t forget to focus on small-scale changes to different aspects of the engagement that are easier to implement with prompts iterations over time. This approach is better than targeting one major change to enhance the consumer experience.

Introduce New Skills to Workforce

Most financial firms and organizations don’t have the talent base with the much-needed skills for starting a digital transformation. In such cases, it’s important to reskill their workforce to meet the requirements of this particular goal.

Financial service firms can hire new talents with the necessary skills or reskill a part of their existing workforce. It can be done using cross-functional deployment and training. It’s also crucial to consider necessary legacy mindset adjustments, given that back-office procedures and processes are reevaluated.

For example, how does a product manager rethink how to simplify the digital loan application process or build a digital deposit account?

New talents and your current employees should continue to learn relevant skills in their fields, especially about technological innovations.

Upgrade Systems and Processes

What prevents financial institutions from embarking on a digital transformation is the prevalence of old methods, technologies, and computer systems.

For example, if your firm is investing 70% of its IT budget on maintaining legacy systems, you’re putting a barrier to modernization.

It’s crucial to get updated with the needs of the time and work on those needs. For credit unions and banks, embracing agile principles and transitioning to cloud computing is the key.

Upgrading systems and processes within your organization will pave the path for success. After all, you can’t go to your destination if there are stumbling blocks along the way.

Takeaway

Financial institutions should embrace digital banking transformation since the competition in the finance industry right now is very tight. Failing to adopt new methods, processes, systems, and technologies, it’s sure that your organization will get left behind.

Start making improvements and adopting technological innovations to ensure the success of your organization.

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