Digital transformation has become a preeminent topic in financial services in recent years. Banks are looking to improve their digital capabilities by combining technology with customer service, creating new products and services, and improving employee productivity.
Banks have traditionally been slow to change, but that’s beginning to change as they realize that digital is part of their future. In fact, according to Accenture research, 58% of banks say they will adopt “digital-first” strategies over the next three years.
What Is Digital Transformation In Banking?
Digital transformation is a process of digitalizing the organization and its business processes. It involves leveraging technology to improve the customer experience and enhance operational efficiency.
A digitalization roadmap includes a strategic plan that outlines how you can make your business more competitive, increase revenue and grow your brand. The goal is to create a blueprint to help you achieve your goals while staying on track with your strategy.
The route to digital transformation is a continuous one, not a one-time event. It is a never-ending process that demands strong leadership and commitment from the top management. Banks need to develop a comprehensive digital transformation roadmap to make this happen.
The roadmap should be based on the four main types of digital transformations:
1. Process Transformation
This refers to the transformational change in the way we do our day-to-day business processes. It includes changes in how we conduct our operations, interacts with customers, and engage with partners.
2. Business Model Transformation
This refers to how we make money by doing business differently than before. For example, we may have to change how we charge fees or introduce new products/services to generate revenue from our customers.
3. Domain Transformation
It refers to how we can use technology to provide better services to customers and solve problems for them in an efficient manner through automation and artificial intelligence (AI). It also refers to how the banks can use technology to improve employee productivity.
4. Cultural/Organizational Transformation
Today’s customers expect brands to be digitally savvy — they want to interact with businesses through channels like social media and mobile apps more than ever before. As a result, companies need to restructure their organizations to align with this new paradigm to keep up with these expectations.
A Three-step Approach To Banking Transformations
Banks are facing a major transformation in their business model. The digital revolution has changed the way people interact with their banks and other financial services providers. Consumers now prefer to go online or use mobile apps for banking purposes. Banks can’t afford to ignore this trend and must embrace digital transformation if they want to remain relevant in the future.
The following are the three steps that a bank can take to transform into a digital business:
1. Identify Customer Needs
The first step towards digital banking transformation is identifying customer needs and expectations. It helps you understand what customers want from your products and services, which allows you to plan better strategies for improving customer experience.
2. Develop A Unified Strategy
For all departments in the organization to work together toward common goals and objectives, a unified digital banking strategy is required. It will ensure that each department contributes towards building a platform that meets customer demands while strengthening their relationship with them.
3. Create An Ecosystem of Partners
Partnering with third-party vendors who provide technology solutions is essential for building an ecosystem. This, in return, supports multiple channels of communication between you and your customers and allows them access to new features or capabilities as soon as they become available on any channel they choose to use (including mobile apps).
The Benefits Of Banking Digital Transformation
If you think about it, the banking industry has been one of the most advanced industries in terms of technology. However, it’s not a surprise that digital banking transformation roadmap is already a buzzword in this sector. The benefits of digital transformation are numerous. They don’t just revolve around changing consumer behavior.
Here are some examples:
- Improving customer experience: Customers want to be able to bank with their favorite brands whenever they want, wherever they want. This means that digitization in banking is needed to provide a seamless experience across all channels, including custom financial software development and websites.
- Improving employee productivity: Automating processes can streamline operations and reduce costs while improving the quality of service by allowing employees to focus more on important tasks.
- Reducing risk: By using data analytics, banks can gain insights into their customers’ financial situations and prevent fraud before it happens. As a result, it reduces costs and drastically improves profitability for banks over time.
- Increased revenue :from cross-selling opportunities and increased user engagement. For example, banks can use their data analytics capabilities to offer personalized offers or promotions based on what customers want and need. Providing appropriate items and services at the right moment can help establish consumer trust and loyalty.
A crucial thing to remember is that no bank can transform its business overnight. On the contrary, it takes time for any bank to change its processes and culture and invest in new technology.
As banks may start with simple measures such as automating manual processes and improving customer service on their websites, they should always look for ways to move towards a more advanced level of digitalization.