The race is on and the stakes are high as increasing numbers of banks take the fast track to digital transformation. According to Celent, 73% of banking institutions believe that digital platform innovation is imperative.1 And MIT Sloan stated in a recent review that “Winners of this race may realize a 40% upside in profit.”2 With statistics like these, it is not a question of why banks are racing toward a digital future, but rather when and how fast they will get there.
Why Digital Transformation Now
Digital transformation is fundamentally reshaping the way banks do business because it helps improve customer engagement and retention, increase operational efficiency and reduce costs. Plus, a well-planned, enterprise-wide digital transformation plan and platform make your bank easier to do business with.
The main market drivers pushing banks to digitize their processes are commonly known as the Four Cs: Customers, Competition, Compliance, and Costs.
Customers — Customers value digital experiences, especially on their mobile phones. They dictate their terms of engagement with businesses and decide what they want and where and how they want to receive it. New digital technologies can help your bank deliver a differentiated experience to attract, win and retain customers.
Competitors — From digital payments to online lending, non-bank disruptors are actively competing for your banking customers.
Compliance — Since many banking systems were not built to support ever-increasing regulations, banks have been forced to leverage people, not technology, to remain compliant.
Costs — Bank operating models based on paper and manual processing introduce errors, redundancy, and cost that will hamper banks’ ability to compete in the future.
Facing the challenges ahead
With industry pundits predicting doom and gloom, and many financial organizations bogged down with disconnected and aging legacy systems spanning various product lines and customer banking channels, how can banks compete effectively?
Although the wholesale line of business system replacements may be necessary in some cases, the reality is that project schedules and constrained budgets do not allow banks to digitize processes from the front office to the back office—and from consumer lending to wealth management to business banking—in the required time frame.
Making the case for a digital platform
The only answer is for decision-makers across all lines of business and IT to recognize that they need the same technologies and capabilities in a “digital platform” to maximize their existing infrastructure. This digital platform must have the flexibility to be applied to the unique use cases of each line of business and be able to integrate easily with the bank’s existing infrastructure and external sources, as required.
Purchasing and/or supporting the same technologies or point solutions for different lines of business is not only costly but also will not provide the efficiencies of a single digital platform for all areas of the bank.
Advantages of a digital platform
A best-in-class digital platform helps all lines of business in your bank address the Four Cs:
- Keeping your customers engaged when and how they want via an integrated, digital, omnichannel customer experience
- Providing business insights into processes and data to gain a competitive advantage, simplify customer support and enable customer self-service
- Integrating business rules into processes to ensure compliance and provide an audit trail
- Reducing operational costs by automating and supporting simpler end-to-end processing and connecting bank customer channels with bank systems of record, as well as external data sources
Create a digital future for your bank by transforming customer engagement, reducing costs and maximizing your existing infrastructure. Download the informative paper Banking on a Digital Future – a Guide to Digital Transformation today.
- Banks’ Emerging Views on Digital-Celent
- MIT Sloan Review Strategy Not Technology Drives Digital Innovation
- 451 Research, commissioned by Microsoft, 2016