By Michael Norring, GCSIT’s CEO,
The current pace of digital innovation across industries is revolutionizing the playing field—especially in banking. The ability to adapt quicker than the competition and provide what customers truly need, sets an organization apart. A recent study found that 43% of those looking to switch banks are looking to move in the next 90 days, and one in three of these consumers were not considering switching prior to the onset of COVID-19.
The past two years taught us many things and for consumers, it changed priorities and plans. The importance of being able to transform to remain relevant is key. Agility should be the main focus across an organization to ensure the business thrives. When its implemented broadly and treated with system thinking in mind—acknowledging the interconnected and dynamic nature of everything, financial leaders can start to make micro-decisions with macro-consequences.
A digital banking transformation must start from the top down. Innovative leaders must make decisions focused on calculated risks to lead to long-term advantages rather than short-term changes. Digital transformation is more than moving the same product to an app. In order to do so, leaders should prioritize these three principles:
- The power of data. A report recently released by McKinsey suggests that broad adoption of open-data ecosystems could lead to a 1 to 1.5 percent gain of GDP in 2030 in the European Union, the United Kingdom, and the United States, to as much as 4 to 5 percent in India. Open data refers to the ability to share financial data through a digital network that requires little effort. It offers a variety of advantages for consumers and banking institutions including more accurate credit risk evaluation, better product delivery and customer service, and stronger fraud protection.
US banks have 1 exabyte of stored data, typically from credit cards, transaction records, bank visits, call logs, support chats, and web interactions. For reference, some technologists estimate that all of the words ever spoken by mankind is equal to five exabytes. The problem is that this data is mostly unstructured. Currently, the US and the EU can only capture a fraction of value from open financial data, McKinsey estimates less than 10% because of the lack of standardization.
As the banking industry works to normalize structured data to fully realize the potential, banks will find a need to also expand the breadth of data sharing. By doing so, the sector is poised to recognize impressive gains in customer risk management, client relationship improvements, understanding customer needs, gaining insights for product development, and scoring credit risks.
- Customer-first innovation. Finding solutions for challenges that customers face is the biggest differentiator for any business—no matter the sector. As COVID-19 forced people inside, banks worked to take their white-glove, in-person services that breeds loyalty, all online. The shift required iterative solutions to ever-evolving problems, but ultimately those that found ways to exceed expectations remained successful during and after the lockdown restrictions were lifted. D. Power found that 41% of customers are now digital-only, and while they are worse off financially, reported a 21-point gain in customer satisfaction. Banks didn’t just move online; they supported their customers in new ways.
2020 should be a case study for all banks to reinforce that understanding and analyzing what customers want and need should be the driving force behind any digital transformation. Seamless delivery of service and personalized product experiences based on continual customer engagement and satisfaction scores, leads to making the right decision about advances.
- Modernization of infrastructure and workforce. Banking systems have long maintained an IT department devoted to security and efficiency, often in place of modern solutions. Achieving digital transformation isn’t just about introducing new tech, it’s about reengineering the information flow. DevOps teams focused on agility are crucial to integrating new practices and showcasing results quickly.
New solutions can be daunting to the ‘old guard’ in the business, but by leading the way with real results and assuaging relevant concerns, IT teams can truly revolutionize banking. It’s not just about the infrastructure, however, it’s also about providing employees the ability to understand and upskill themselves to support the transformation. The World Economic Forum estimates that more than 55% of finance sector employees will need to upgrade their skillset to meet existing and future demands. Hiring can solve some of these challenges but leadership should empower their teams for long-term success through technology training and cross-functional implementation.
Digital transformation is a project that promises great returns but requires great investment—not just with big budgets but with systemic support. Remaining agile while prioritizing data and customers, modernizing systems will become much more attainable. Technology advancement is required to remain relevant and with the right resources and perspective, leaders can ensure their own success.
Global Banking & Finance Review
Why waste money on news and opinions when you can access them for free?
Take advantage of our newsletter subscription and stay informed on the go!
By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact
Business4 days ago
With deals set to surge in 2024, don’t forget to manage M&A cyber risk
Technology4 days ago
Transforming Financial Services: The Impact of AI on Customer Service and Profits
Technology4 days ago
Fintech: 2024 will be the year of fintech partnerships
Technology4 days ago
4 Dynamic trends shaping FinTech (and how to navigate them)