Digital Banking Transformation: Where Should You Start?

Many organizations are overwhelmed by the scope of change required to become a "digital bank." Instead of being stuck in neutral, here are some ideas that can be implemented relatively easily, increasing revenue, decreasing costs and improving the customer experience.
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Bank and credit union executives are bombarded daily with messages warning of the demise of banking as we know it if major actions aren’t taken immediately. From replacing legacy systems to implementing artificial intelligence, there are more priorities than any organization can handle at once.

As a result, many financial institutions end up doing nothing or focusing on initiatives that don’t move the needle on revenue, cost containment, customer experience or market value.

The question, “Where should we start?” has never been more important. There are mounting pressures from consumers, the government, new competition and shareholders to do something meaningful … TODAY. While you could debate which priorities are the most important, below are some practical ideas that should be considered. Most are relatively easy to implement, providing a foundation for broader strategies going forward.

(More Details: 5 Actions To Accelerate Your Digital Transformation Journey)

Improve Your Mobile Banking Experience

Consumers increasingly are selecting bank and credit union providers based on their digital banking capabilities. It is no longer enough to just provide account balances and a list of recent transactions on a smartphone. Consumers want more advanced functions. Here are some of the mobile capabilities banking providers must offer:

Mobile Account Opening. While most financial institutions will claim they allow customers and members to open checking accounts or apply for a loan on a smartphone, a very small percentage can provide end-to-end support without visiting a branch. This is unacceptable. There is no reason why a consumer must visit a branch to provide a signature, verify their personal information or transfer funds. There is no process in banking more archaic than requiring a new customer to visit a branch. Fix this first!

Funds Transfer. Consumers expect to be able to easily transfer funds between accounts as well as to accounts at other institutions. If you already provide this service, determine if the process is as simple as it can be. Simplicity can be measured by the number of keystrokes needed to complete the task.

Bill Payments. “Set it and forget it” should be the mantra for mobile bill payment capabilities. As with funds transfer, make sure the process uses the minimum number of keystrokes and is intuitive. Remember, if it is hard to determine how to set up this capability, it doesn’t matter how easy it is to use. Consumers will have already abandoned the process.

Mobile Deposit. Several studies have found that customers will rate your entire mobile banking experience based on how easy it is to deposit a check with their smartphone. If the customer needs three or four tries before a check is actually deposited, there is something wrong. The customer will move to another provider.

P2P Payments. There is no room for internal politics when it comes to person-to-person payments. Consumers will use the apps that the majority of their friends use regularly (Venmo, PayPal, Square), not necessarily the app that you and your fellow banks and credit unions have a stake in (Zelle). Make it easy for your customers to use the P2P app they prefer and use will increase.

Push for Engagement. There is a good chance consumers aren’t as familiar with your mobile banking application as you are. Commit to continuous education and promotion of your mobile banking capabilities. Use short-form video and easy-to-access tutorials to educate consumers and provide ongoing messages to customers who have not fully utilized the tools available. Until you have high penetration and utilization of your mobile banking app, you still have work to do.

Several other mobile banking functions should be improved at most financial institutions, and most mobile banking apps are in serious need of a redesign, but if you can fix the items above, you will be well on your way to digital banking improvement.

Remember, attention must also be paid to the legacy back-office operations that hinder digital banking innovation. Rethink internal processes to set your institution apart from the competition.

(More Details: How To Give Mobile Banking More Curb Appeal)

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Become a Financial Partner

Consumers hate to budget and have a hard time saving. New digital technologies and transactional monitoring capabilities can allow financial institutions to position themselves as a financial partner to consumers like never before. Take advantage of these capabilities and you will positively impact account growth, revenues, trust and loyalty.

Real-Time Financial Insight. There is no reason why consumers should not see the impact of digital transactions immediately on their mobile device. With fewer and fewer checks being written, the importance of real-time financial insight is a must-have.

Proactive Alerts and Notifications.  Consumers are no longer satisfied with only receiving notification about a problem after it occurs. Instead, they want an alert if a transaction may cause a problem, much like late-model autos warn drivers when there is trouble ahead. But don’t stop there. Use alerts and notifications to highlight opportunities to improve a consumer’s financial situation as well.

Automated Savings Tools. Most financial institutions provide some type of calendar-based automatic saving program. With the ability to monitor individual relationships over time, it is now possible to build automated savings tools that remove excess funds from a checking account and transfer the funds to a savings plan (or vice versa when required). From automatic rounding tools, to movement of funds to investment instruments, consumers will welcome any help their financial institution can provide to increase savings.

Financial Education. Gone are the days of financial education seminars held in branches or hotel conference rooms. Instead, financial education can now be delivered via online or mobile banking apps. Not only can this content be personalized to an individual consumer, but insights can be collected as part of the engagement, improving both targeting of message and delivery of solution.

New Product Innovations. New products that can help consumers budget, save, reduce debt, protect privacy, etc. are being offered constantly. This is where partnerships with solution providers and fintech firms can have the greatest impact, especially for smaller financial institutions with limited budgets. These new products also can provide differentiation at a time when price and location no longer do so.

Personalize the Customer Experience

Much is being written about the importance of knowing, understanding and rewarding consumers. In a digital age, where data can be processed faster than ever, and highly personalized solutions can be delivered in real-time, it is no longer acceptable to have “product campaigns” or “next-most-likely-product” sales initiatives.

Move From Product Campaigns to Solution Marketing. Customer data must be processed every minute (or more rapidly), with “next-best-actions” offered based on identified needs, past and current behaviors and solution options. These options should be delivered to customers in their channel(s) of choice immediately in a manner that is both personalized and humanized. The integration of humans in the process should not be ignored if this is the best way to provide a better experience.

Advanced Marketing. Banks and credit unions need to move from lip service to action, finding partners who can assist in changing outdated marketing strategies and tactics. The movement from offline to online marketing is being driven by the ability to serve the consumer in a manner never before possible. Find partners with the requisite talent to assist with the collection, processing, analyzing and using customer insights to deliver personalized marketing.

Digital Retargeting. Millions of dollars of new business and revenues are lost annually by not tracking consumers’ shopping and purchasing patterns. Digital abandonment occurs not only at online and mobile retailers, but also as consumers try to use online or mobile banking apps. Banks and credit unions need to understand the customer journey and retarget all the people who wanted to engage with them but stopped doing so out of frustration.

(More Details: Personalization: Moving From Optional to Necessity in Banking)

Next Steps: Build, Buy or Partner?

There have always been options as to how to innovate and provide better solutions for consumers. The difference today is the importance of speed in the equation. No longer is it acceptable to be a “fast follower.” Instead, it is more important to embrace change, accept risk and disrupt the financial institution/consumer paradigm. The digital banking environment is moving faster today than ever before, with the consumer leading the call for new solutions.

Because the marketplace is rewarding innovation, there is a greater need to find partners who can provide the solutions that can be implemented quickly and integrated easily. From new products to improved marketing capabilities, sitting on the sideline is no longer an option.

The key is to take action NOW as opposed to simply talking the talk. This may require a change in internal culture, realigning the overall organization and finding new talent. But there is little choice when organizations like Amazon, Facebook, Google, and a vast array of alternative fintech providers are moving fast to fill the customer experience void.

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