Digital Banking: Are the banks ready for the transformation?


Today, “Digital Transformation” is one of the leading issues that banks face, with only a small section of developing and developed (tier 1) banks ready with a fully functional app. On one hand, the number of users frequenting the virtual world for their banking needs is increasing rapidly, with Juniper Research predicting over 1.75 billion mobile banking users will emerge by 2019. On the other hand, the banks encounter the need to evolve constantly with changing landscape of technology (Internet of Things, Big Data and others).

For banks to keep up with the changing tech-landscape and the disruptive market environment, they need to fathom the challenges of customer behavior. Once such awareness has been created, operational schemas can be generated keeping in mind the desirable customer behavior. The most significant motivator for change must be the rise of Millennials, the younger generations. They fall into the category of hyper-connected customers who are online 24*7, in touch with each other through social media and connected through the cloud. If banks fail to keep up with the changing customer behavior, they could face extinction of customer loyalty, as they might gravitate towards signing up for services offered by non-banking avenues.

How can banks respond effectively to the digital gap they face? How can they retain and create space for the Hyper-Connected Clients of today?

Here is a comprehensive guide to launching your bank onto digital world effectively:

Insights Backed by Data

Previously, banks connected to the customers through loads of transaction data that allowed them to rank customers for their capacity to carry credit. However, the 21st century is the age of holism. Banks need to look at the customer holistically, understanding their perspective through customer activities online. This means that they must collect data on customers through almost every available digital source, filter it and bring in relevant information. Based on this collected data, banks should build a strong data and analytics machine, which would give out actionable insights.

The Wholesome Experience Diet

Today, the physically located branches do not drive banks. As the use of mobile devices increases, the preference of customers also sways, banks have to be able to provide real-time and across-the-channel app. While the physical branches would not face extinction, their importance in the cycle towards building customer loyalty and responsibility has reduced.

When a bank builds an app for their customers, they have to come up with almost every imaginable situation where the client will seek their services: beginning from buying groceries for the house, payment of school fees and other monthly bills, splitting of dinner bills, loan payment schedules and finally, life insurance schemas. Your app must become the personal finance assistant for the customer, capable of dealing with any situation related to currency, and connect with verified third-party apps that can notify you on the impending payment.

Robust Digital Marketing

The competition for banks is not with their fellow banks alone but with the entire e-commerce market. Banks have to prove their worthiness by being up-to-date with the latest technological events. Have two members of your tech-team solely dedicated to updating the fintech itinerary, especially in tune with big-data and predictive analytics developments. The tip of digital marketing iceberg includes acing digital media, customer lifecycle on the digital platform and content marketing.

Digitization of the Core Banking Procedures

Banks have succeeded in electronically enabling their core procedures after the coming of .com. Now, the next step in tech-evolution is to digitally enable them. However, there is a critical difference between the life of electronic and life of digital. While electronically enabling the processes simply means to process and share PDF files (of information previously documented on paper), digitally enabling them would require a three-pronged approach. This would start with planning a digital action-schedule for the various core tasks, moving into sub-tasking each of the stages coupled with consistent training of the bank staff and recruitment of technologically-capable staff.

The Millennials’ Plan

Here is a short mission statement from the millennials to banks:

  1. Mobile-First: This is the most precise claim on how customers wish to communicate with their banks. Make sure your bank is enabled to work comfortably on mobile devices
  2. Thick Security Walls: Consumers need to know that your digital platform is well-protected by live protection walls and policies
  3. Always New: Your mobile app has to keep adding in new technologies which are well-tested, stable and rapidly improve your customer’s experience
  4. Storing it the Right Way: Banks need not be pulled by the heavy costs of processing and storing their customer information. They can go for open-source and propriety options where customized features are provided.

Hardware for Digital Platform

Once a digital action plan for customers has been created, the banks have to audit and evaluate the digital architecture within their company. They need to examine changes which could positively impact the comfort of their staff with the digital developments. This will include workshops, training sessions and forums for help. Along with this, banks must create a space for making decisions swiftly. The digital action plan for customers will be actualized only when the company has the right infrastructure. This is in line with the classic ‘The software can only run on compatible hardware’ principle.

With the six axioms mentioned above, digital banking can grow significantly, bringing smooth customer experience fostering customer loyalty and breeding a fertile ground for the Millennials’ loyalty.

Author : Sahana Rajan Date : 03 Nov 2016