5 crucial steps financial institutions must take to truly embrace digital transformation
Over the past two decades, technology has quickly become ingrained in modern society. Some of the best examples include social media, artificial intelligence, smart wearables, and cloud computing, all of which millions of consumers around the world now use and enjoy.
Indeed, the so-called digital wave has taken over every industry, and banking is no exception. For your financial institution to thrive, you must employ smart strategies and ride the wave. If not, your organization may end up getting dragged into deeper waters.
Of course, a digital transformation is not a simple task. This is particularly true for older institutions that are pioneers of traditional banking. Nevertheless, you can make the transition a lot smoother and find it easier to fully commit to a digital banking transformation if you follow these steps:
Adopt New Business Models
One of the first things that financial institutions need to do to embrace digitalization is to adopt new business models. Many legacy systems, for example, still use silos to store the vast amounts of data generated by daily transactions. While not entirely unreliable, data silos can be slow and costly. By migrating to a cloud-based service, banks and financial institutions can offer faster, more efficient services.
It’s also crucial to invest in a banking platform that lets you streamline business processes and manage various front-office transactions and back-office operations. In general, it’s best to pick modular software that you can customize based on your bank’s specific needs. This way, you can develop and continuously improve client experiences that are unique to your own brand of banking.
Guarantee Secure Payment Solutions
While digital banking continues to become more prevalent in the US and around the world, there’s still a significant chunk of consumers who don’t use it. A lack of trust in online systems is a big factor as to why, as are the well-documented cases of cyberattacks and fraud. This is, of course, a big challenge if you’re planning on a digital transformation. After all, if your customers won’t use your services, then all your digital transformation efforts will be put to waste.
Thus, aside from providing accessible and immediate payment solutions, you should also guarantee the security of every transaction. This can increase confidence in your banking systems, resulting in loyalty and frequency of usage.
Finally, the centralization of processing and settlement is also critical. This will not only create more convenience, but also lower your bank’s cost per payment. The increasing number of financial services also means that your platform should be able to create a payment ecosystem, which can be done through APIs.
Build Authentic Relationships
One of the biggest problems of going digital is the difficulty of developing strong, authentic client relationships. Because there’s minimal face-to-face interaction through screens and keypads, the lack of the proverbial human touch can make your financial institution seem cold and impersonal. This, in turn, can greatly hamper your customer retention programs.
The key here is to maintain the balance between the old and the new. Some processes can be made purely digital, while others can utilize a combination of digital and traditional methods. A good data analytics tool can help in this regard. With it, you can determine your customers’ most common pain points and thus come up with ways to solve their problems more efficiently.
The ultimate result here is not only improved relationships, but also loyalty. With a trusting, stable customer base, you have your very own brand champions who are more than happy to advocate your banks and its services.
Improve and Streamline Communications
In relation to building authentic relationships with your customers, there should be a focus on communicating consistently and appropriately. The digital shift has changed the way customers talk with brands, with people often using one or more channels depending on the concern. Some may prefer email, especially if there needs to be documentation, while others may like the promptness of chatbots.
Whichever way your customers prefer to communicate, you have to be prepared to meet them there. Of course, make sure that your messaging and tone are in line with your institution’s brand. More importantly, make sure that you’re always in compliance with regulatory guidelines.
Speed Up Processes Through Automation
Last but certainly not least, a digital transformation won’t be complete without improving the speed of your services. Remember that people are now busier than ever, so they need banking services that won’t take up much of their time.
Fortunately, this can be solved by automation. Many facets of banking and finance can benefit from this technology, including customer service, credit card processing, fraud detection, KYC or know your customer, account closures, and even fraud detection. There are also components of data analytics that can be automated, such as collection and processing.
Beyond speeding up processes, automation can also help your bank go to market faster with new products. Ultimately, this can increase profits and lead to business growth.
The most important thing to remember here is that a digital transformation takes time. Implementing a few changes today won’t immediately result in the outcomes you want. Again, be ready to commit to a long-term and continuous process. When done right, digital transformation can lead to even greater success for your organization.
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