Digital has permeated almost every facet of our lives as consumers in an “always on” connected world. In fact, it’s even impacted how we, as a company, serve our clients across industries based on their top priorities and challenges to better reach and serve their customer base – and the financial services industry is no exception. Over on our new Digital Transformation blog, Michael Porter, highlighted a story from Information Age around the first UK “digital-only” bank Charter Savings Bank launching. While I’d argue that they’re not the first, nor will they be the last – considering how hot the fintech market is right now – the main premise of the story is definitely relevant to the paradigm shift the financial services industry is experiencing. And we’re not the first thought leaders to be talking about it – Chris Skinner, Brett King, Brad Leimer and Ron Shevlin are all advocates for digital banking or neobanking.
We’re seeing both digital disruption AND digital transformation across the board in financial services. Not only in retail banking, but in wealth management, investment banking, capital markets, insurance and payments. Michael makes an interesting statement in his blog post that I’d debate:
“…digital transformation drives disruption.”
I’d argue that it’s the reverse that’s actually happening in financial services. The consumerization of mobile technology, APIs, cloud services, wearables and the like are enabling technologies or “digital disruption” that have relevance in the industry, and brick-and-mortar banks, payment companies, insurers and other traditional financial services providers are having to find ways to embrace digital transformation as a result.
Furthermore, non-traditional financial services providers and technology innovators (a.k.a. digital disruptors) like Apple, Google, Amazon, Uber, Simple, and PayPal, are changing the digital banking game for the Wells Fargo’s, Bank of America’s, Citibank’s of the world. All of these financial institutions are having to re-platform their products and services to satisfy three primary goals:
- Customer Goals: Simplify and help customers more easily manage their financial lives (i.e. mobile banking, mobile payments)
- Sales & Marketing Goals: Interact and engage customers (i.e. personalized experiences, social integration, digital marketing)
- Operating Goals: Remove traditional barriers, adopt new operating strategies, deal with disruptors, partner with innovators (i.e. revenue, growth, retention and customer loyalty goals)
While we may never really see a “Google Bank” per say (because it doesn’t need to), they are disrupting the traditional relationship with the financial customer. In both retail banking and institutional segments, digital’s pervasiveness in the industry is forcing financial institutions to redefine how they deliver value to their customers with their products and services – all through what we call digital transformation. While, it may take on many different shapes or forms for your organization (evolving the mobile banking customer experience, the use of big data and analytics, digital marketing, etc.) one thing is certain – digital transformation is imperative!
