Previously, I analyzed the current themes in banking according to executives. This blog outlines how banks are implementing digital transformation strategies.
Digital transformation strategies for banks have, for years, centered attention and investment on frictionless service, personalization, customer journeys, user experience, lean transformation, organizational alignment, emerging business models, FinTech partnerships, and mobile. While this will continue, it is becoming increasingly apparent that the industry is reaching a tipping point on its digital transformation journey.
Most banks have addressed the digital transformation themes discussed previously in some fashion. They have digitized the foundational transactions, mobile check deposits, peer-to-peer payments, credit scores, and access to loan accounts, that were once considered cutting edge. These transactions are now present in many mobile and online banking apps. If banks haven’t digitized them yet, chances are they are in the planning and implementation stages.
Current leading-edge digital product development activities include capabilities for tracking accounts from different financial institutions, and built-in financial wellness and budgeting features.
Banks have also established innovation labs and are experimenting with new technologies like artificial intelligence (AI). These labs are upgrading IT skills and implementing organizational changes to be more agile and customer-centric.
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There is certainly more work to be done, and levels of digital transformation maturity vary among banks. But the strategic roadmap has largely been or is in the process of being, implemented. The initiatives that have dominated the past 10 years have moved from change-the-bank (CTB) budgets to run-the bank (RTB) budgets.’
The Need to Transform
Digital transformation has become a business-as-usual activity in the banking industry, and Gartner’s research confirms this.
According to a survey of more than 3,000 CIOs across industries, 33 percent say they are at the stage in which they are scaling their digital transformation initiatives, up from 17 percent the year before.
CIO interest is now focused on more-sophisticated technologies, such as AI and creating value for the business, rather than just supporting it. It’s an exciting time to be in the world of digital banking.
Banks are starting to see the results. According to a J.D. Power study released in April 2019, innovation and improving customer service is leading to higher customer satisfaction. Since 2009, overall retail bank customer satisfaction has grown, as have satisfaction scores with in-person branch service, online banking, and ATMs. Since 2009, satisfaction with mobile banking has improved. There has also been an improvement in customer knowledge of the features, benefits, and fees associated with banking products. Customers currently view their banks as being more innovative and financially stable than they did in 2009.
In 2009, mobile banking customer adoption was minimal. In 2019, 53 percent of retail banking customers were using mobile banking. Customers switching banks is at a record low – only 4 percent of customers reported switching banks in the past year.
There are still opportunities for banks to improve. Specifically in the areas of problem resolution, telephone customer service, and online-assisted customer service (e.g., online chat, email, social media). Banks are aware of these shortcomings and are addressing these gaps in their customer’s digital experience.
To learn more about previous digital transformation themes, post-digital transformation themes and trends, and how to ensure the successful implementation of post-digital transformation programs; you can click here or complete the form below.