What Does Digital Transformation in Banks Really Mean?
What is Digital Transformation in Banking?
Banks of every size are now attempting to digitally transform their banking business by adopting new technologies and services. So! What is digital transformation in banks? Digital transformation in banking involves a shift to offering digital and online services as well as the large number of back-end modifications required to support this transformation.
Many banks make costly mistakes by launching multiple digital initiatives. These initiatives fail because they lack the support and coordination necessary to compete with digital-native options. Instead, banks must adopt a top-down approach to digital transformation, which includes integrating digital systems and customer experience platforms, apps, infrastructure, and other technologies.
Example of Digital Transformation in Banking
- Block-chain Technology
- Artificial Intelligence (AI),
- Analysis, Management & Collection of Customer Data
Digital transformation in banking may mean many different things. However, these are the key points to help you plan your bank’s digital journey.
A Digital Transformation in Banking Enhances the Customer Journey
Each bank has a website. Many have a mobile app or some other digital service. While these digital features cover most of what we think of as “digital service”, they do not include digital transformation in banking. These digital features allow you to move a large step towards a bank’s digital transformation. This is digitizing the customer journey. How do you go about digitizing your customer journey? How does it work?
Marketing leads are often transferred to sales. Then, sales are transferred to customer service. Individuals must go through multiple departments before they are able to receive a product or a service. The result is often disjointed or impersonal.
Digital Financial Education During COVID-19
Results from a 2020 survey among marketing executives at financial institutions. The COVID-19 age continues to present key challenges to financial marketers, including brand loyalty and consumer acquisition.
The digital transformation of banking can help you create a more seamless and personal digital customer experience. To create a digital customer experience, you need to take steps to integrate all the information into one platform. Customers can be managed through the same tooling and sometimes by the exact same people. It is possible to improve the organization of your teams and integrate technical people into your sales teams. You can also merge marketing and retail in one team.
The most important aspect in digitizing the customer journey is that customers can move seamlessly from sales to marketing as part of an online financing application through in-app billing. Customer support can also be done directly within the app. It involves mapping out the customer journey, building tools and applications around it, and focusing on critical points. One example of a digital customer journey is one that allows customers to click on an advert, create an account online, access tutorials and onboarding information through their app and then pay bills online or transfer funds online.
This digital transformation in banking involves understanding the customer’s needs and then investing in these needs. This will not only save you money, but it will improve customer satisfaction, allow staff to engage in value-added activities, such as relationship building, as well as save time and effort by automating your processes.
Digitalization, Big Data in Banking Digital Transformation
Modern banks are able to access more data than ever before. The more services you provide digitally, the more data you will automatically collect. This data will allow you to make significant improvements in your operational model, customer service, and business strategy. Data can be used to better understand your customers and to find opportunities to improve products and services.
Every part of the bank benefits from big data and data mining. marketing and sales are the obvious beneficiaries of a bank’s digital transformation strategy. This is where big data comes in handy. You can use customer information to create marketing campaigns or financial educational offers. This data usage can also be used to reduce customer churn, by creating offers or solutions to stop customers from leaving. Analytics can determine when customers need loans and when they will default. It also helps to predict when cross-sells or up-sells may be beneficial. This data allows banks to provide highly customized offers and solutions through either a representative or an automated offer or solution within an app or portal.
Bank digital transformation strategies often include the use of digitally-driven solutions such as chatbots and AI. J.P. Morgan Chase has taken this to the extreme by integrating COIN in order to process and handle loan agreements. The same AI is integrated into customer services, providing assistance, account opening, and many more. These solutions, such as chatbots, self-service, and 24/7 support, offer customers a better experience while also improving their business.
The Bank Digital Transformation: A Focus on Change
Although there are many aspects of digital change in the banking industry’s sector, the most important aspect is adaptability and readiness to change. Banks often find themselves behind legislation and security measures that protect customer privacy and data. However, traditional banking is losing ground to digital-native solutions and money apps in terms of growth as well as customer acquisition. It is crucial to digitally transform banking by adapting bank policies to changing consumer demands, being flexible to new technologies, and being able to respond to market changes.
Digital transformation in banking may require a change of heart. To be a truly digital organization, you will need both.
Digital transformation in banks is difficult because many banks are failing to meet their own digital transformation goals. There are many reasons banks fail to make the digital transformation as this include a lack of consistency in support for digital applications and a lack of internal agility. Banks can also change their approach and replace legacy frameworks. They can also work to build a digital culture internally, before developing single-use digital capabilities. When the digital culture is established, digital platforms and services offer great value to consumers.
Digital Transformation in the Bank Sector: The Keys to a Successful Launch
Customer retention strategy: The core goal of digital transformation within the banking sector
By maintaining a solid customer retention plan, you can reduce the cost to attract new clients by more than 30%, speed up this process by approximately 1.5 times, and increase your revenue by more or less 80% over an 18-24 month period.
Trust is already established by repeat customers. This means that their conversion rate is at a minimum of 60%. For new customers, however, it may be as high as 5-20%.
DBS has demonstrated the importance of customer retention through digitalization. It was probably the first bank that offered banking products to be marketed as a technology company. Global Finance, Euromoney, The Banker, and The Banker all claim it to have been a digital leader of the world’s banks in the past 3 years.
DBS executives believe that digital business has transformed the customer experience and made it “invisible”. Customers and employees are the focus of “making banking joyful”. It all began with the digitalization of internal operations, which reduced staffing by up half (! This led to the expansion of customer service opportunities.
Task 1: Create a strategy to retain customers.
The key components of digital transformation services to banking
Digital transformation refers to the shift from traditional working methods to completely new, modern technologies-based ones.
Blake Morgan, author of The Customer of the Future states that this process can have a profound impact on the company’s customer service, organizational structure, and data integration. It also affects logistics and sales.
Digital transformation components can be divided into three categories.
1. Relationships with customers
Improvements in customer experience are the most visible results of the transformation. The introduction of digital technology has simplified external communications, but also made it possible to improve sales analytics, marketing, as well as marketing, and analysis.
This allows them to monitor what’s happening with clients at all times, to get in touch with them when it is convenient and makes their products more personal. It is possible to create a more effective marketing strategy by understanding your audience and adjust prices depending on demand. All this leads to improving customer relationships qualitatively as well as quantitatively.
2. The political will and determination of the leadership
The investigation by BCG reveals that digital transformation fails in 70% of cases. This raises questions about why this happens and what an organization can do to make the digital transformation successful.
Fear of change by management is one of the key reasons for the failure. This leads us to the next part – the leadership’s political will.
The “let’s try and see what happens” approach is fundamentally flawed. Always be clear and concise about your goal.
Innovation’s effectiveness depends on how to open the leadership team is to change the business management style, processes, and customer experience. Being self-aware will help the team to identify a clear path for digital transformation and work towards its success.
Digital banking transformation strategy.
There are two ways to transform your financial business: slowly or completely.
There are several ways to incorporate digital technologies into your financial business.
1. Radical. Designing a business model starting from scratch.
Cons High-risk plans that may not come to fruition.
The team is more youthful and more motivated than the pros. This option is best for banks with small divisions that are prepared for large investments.
2. Consistent. Establishing a separate business line.
Cons – Slow implementation of technology.
The pros: Optimization of management, the possibility to test the approach in order to bring about more global innovation. This type of digital transformation is a common trend in banks, regardless of their capital or size, because it involves a gradual rise in turnover and, consequently, investments.
The moral of digital transformation for banks is to “think big, start small”
Digital transformation in the bank and corporate culture
The business development team sees digital transformation as more than just a chatbot. Automation and standardization of work processes are based on fundamental changes in employee behavior. Although digitalization cannot replace manual labor completely, it can help to transform corporate interactions.
Incomprehensible calculations often go to the risk section in a bank. The IT department is also responsible for all non-business tasks in non-bank organizations with unclear processes.
What happens following digital transformation? The IT department takes the lead because digital transformation, including the automation and improvement of digital resources, is an essential task.
Profit enhancement is a new area in risk management.
There were once three key links: IT, risk, and business. But now, the boundaries are blurring. Business managers look after the bank’s business. The business development department assists IT. And IT supports all aspects of the bank’s performance.
Digital transformation does not just involve modernizing the corporate design, but also about building relationships among people that can lead to future acceleration.
The impact of digital transformation on an organization
Based on the experiences of large financial companies, we believe that a bank that’s digitally enabled is the bank for the future. Digitalization of the entire business can boost customer loyalty, which in turn affects other business processes.
How digital transformation solves business problems
1. Issue: fragmentation in decision-making.
Solution: Plan based upon the most current analysis data on the market and the needs of the audience.
2. Problem: Inadequate communication with clients and passiveness.
Solution: Transfer contacts into an online system where the bank can remain in touch 24/7.
3. Issue: A standard approach for services.
Solution: Make personalized offers based upon the client’s preferences and past interaction with the bank.
4. Problem: Late delivery of reports
Solution: Create and instantly send digital reports by automatically calculating sales and marketing metrics.
5. Problem: Undefined objectives and goals.
Solution: Introduce tools for corporate communications planning and communication, differentiate access to data by department.
Let’s Define! What Is Beyond Basics?
Transformation goes beyond the borders of the company. This became even more crucial during the pandemic. With remote work showing no signs of slowing down, it is still at the forefront of business decisions.
Do you agree that saying “yes” to innovation is worth it? At least, to become one of those companies who have achieved the goal.