As banks and credit unions transform digitally, implementation may be slower than expected, with priorities hard to discern. It’s difficult to scale digital initiatives, for one thing, and hard to find the right talent to implement change for another. Too often organizational culture is another barrier.
So, how do financial institutions make the progress needed to succeed in a more digital age?
In a sponsored by , “Five Keys to Digital Transformation,” it was clear that the transformation journey starts from deep within a financial institution — making cultural and back-office process changes — then moves to improving the customer experience across all channels using data and advanced analytics.
Five significant actions were found to be the most important.
1. Organize & Design Around Customer Journeys
The biggest challenge banks and credit unions face when trying to create a seamless experience across channels are legacy product silos. Because of silos, product leaders tackle customer experience needs independently, focused on product — not consumer — goals. One of the solutions to this challenge is to create a unified, multichannel view of the consumer with cross-functional teams and customer journey maps.
“Banks and credit unions can stay ahead by taking bold steps to deliver the digital experiences consumers want while also driving revenue,” states , Senior Vice President and General Manager, Global Banking & Financial Solutions, Kony, Inc. “In order to set the right course for their digital future, banks must exclusively focus on the customer journey. Ultimately, it is the customer — and their interactions with you through digital channels — that will determine your success or failure.”
Simple to state, yet mapping the customer journey is difficult in practice. In fact, according to research on customer journey mapping best practices, half of all mapping initiatives fail to drive change. The research reveals three keys to journey mapping success:
- Involve broad, cross-functional teams. You can’t drive change without a buy-in from all those impacted by the change. Instead of mapping only using customer experience or marketing departments, they should be joined by product managers, channel managers, Compliance, risk, etc. Major digital transformation can’t be achieved without universal engagement.
- Involve consumers. There is a need to go beyond the conference room and engage customers and members in the development process. If consumers aren’t involved, changing needs can’t be properly assessed.
- Select the right journey. At a time of banking industry transition, it is important to start from a clean slate rather than working from legacy journeys that were built on branch and non-digital engagement. Remember, most buying journeys today start with online or mobile channel searches.
2. Monetize Digital Banking
The amount of data held on consumers could enable banks and credit unions to develop highly intimate financial portraits of households based on transactions, financial holdings, location, biometrics, user experience and social media feeds. As mentioned above, however, most of this insight resides in product silos.
With relationship-based insight, financial services organizations could combine data on where consumers shop, how much they spend, each household’s financial profile, their financial goals, etc. for the individual benefit of each consumer. These insights could provide massive value that could differentiate an institution through personalization. They even have the potential to monetize relationships similar to Amazon Prime.
According to , Principal Analyst from and participant in the webinar, “Banking needs to rethink relationships to explore monetization and business models. Looking at relationships as part of a revenue model, banks and credit unions need to determine how they can monetize the value they create for consumers.”
3. Build Partnerships for Expanded Ecosystems
As open banking begins to become the norm, it is becoming clear that collaboration will be part of the foundation in the new banking ecosystem – with the traditional banks, fintech firms, big tech organizations and even firms outside of banking bringing unique expertise in product innovation, delivery, technology and customer experience.
It is very possible that traditional banks may not be at the center of these new ecosystems. They may be participants – providing capital, human resources, distribution outlets and massive data reservoirs in combination with other organizations that are more agile and better innovators.
According to an article by “Banks that choose to engage fully in the new banking ecosystem based on open data will focus on the element of their environment that they can control – the organizations they choose to collaborate with to create new services based on pooled data. These will be partnerships of mutual advantage, with the potential to create new sources of profit for both parties that will be shared between them.”
In this future banking ecosystem, collaboration between organizations and alternative industries will provide significant potential benefits for consumers, businesses and the overall economy. The ability to combine best-in-class products that save time and are hyper-personalized will provide both wider consumer choice and enhanced competition.
“We are building a forest, not a palace. Rather than establish everything by ourselves, we create an ecosystem that nurtures things to grow within it.” – Xiaolong Zhang, founder of WeChat
4. Improve Mobile Experiences
Consumers who were once online-dominant are now becoming mobile-dominant, according to PwC research. There has also been a rise of ‘omni-digital’ consumers (digital consumers without a preference for using a laptop, a tablet, or a smartphone), with many of these consumers quickly developing a preference for mobile banking.
More importantly, consumers are viewing basic banking engagement via smartphone as indispensable. This would include checking balances, transferring funds between accounts and making P2P payments. This shift in platform preference means that most financial organizations should build for the mobile experience first.
“It is critical to recognize that banks and credit unions are no longer competing in the digital arena solely against other banks and financial institutions,” states Kendall from Kony. “They are actually competing against the user experience delivered by digital giants such as Uber, Zappos, and Amazon. These companies are influencing your customer and members’ expectations and are also now setting the pace for innovation.”
For most organizations, an improved mobile experience has to be built from the ground up. This includes using technology that is far different from what was commonplace just a few short years ago and design elements that make every process simpler and more user-friendly. Steps must be removed and rethought for the digital future.
“Banks and credit unions must use convenience in the short-term and context in the long-term to design better mobile experiences for customers,” states Wannemacher from Forrester. “This requires leveraging of everything known about a customer at the point of engagement, and providing a level of convenience similar to what P2P services are providing today.”
5. Integrate Data and Analytics Across Silos
“We are drowning in data and starving for insight.” – Executive at a global bank
Now, more than ever, banks and credit unions must become intelligent organizations, enabling quicker, insight-led decision making. Winning financial institutions will leverage data, analytics and new talent to transform their organizations internally and engage with consumers to meet their ever-changing expectations.
Using data and advanced analytics, organizations will need to process insight in real time, build and distribute personalized products and services, and use ‘always on’ intelligence to sense, predict and act on changing customer and market developments. Unfortunately, most organizations have more data at their disposal than they are using. Further, the ability to convert data into insights, and then to an improved consumer experience, is often close to impossible at present. But it can, and must change.
Financial services leaders of the future will be able to access a single source of insight and intelligence that will enable seamless back-office processes and digital customer experiences that are in real-time and add value both for the organization as well as the consumer.
These qualities will be the foundation upon which everything else in the organization is built. It will also be the point of consumer differentiation for traditional financial institutions, fintech firms, big tech organizations and non-financial players.
It is important to remember that, while the collection and use of data is at the foundation of all other actions around digital transformation, culture must also change – moving away from many of the traditional banking processes and beliefs around consumers. While cultural change may be slower than technological change, a proactive focus on changing culture is still an imperative.
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