By Brian Pallas, founder and CEO of Opportunity Network and Ann Wong, Director of Corporate Communications & Investor Relations at Opportunity Network
The financial services sector is going through a dramatic change in today’s highly connected digital environment. With heightened customer expectations, ever-increasing customer touchpoints, and the advent of new technologies, banking institutions have been forced to enhance their digital capabilities to stay relevant, whether it be through front-end features such as mobile apps or self-servicing tools for customers and staff. Furthermore, with the rise of financial technology (Fintech) companies who serve as both industry disruptors and partners, banks now face the challenge of clearly defining a roadmap for both cultural and structural-level transformation and dedicating the necessary resources to it.
Digital banking transformations, nevertheless, are complex and intertwined with critical concerns around fragmented IT infrastructure, regulatory approval, and highly sensitive data security. Banking executives will need to carefully prioritize the right digital strategy and leverage effective digital tools in order to catalyze the transformation. But before senior executives inundate themselves with the intricacies of specific technologies, they need to ensure their selected digital tools fulfill three criteria:
- Require lightweight IT integration with internal systems
Digital transformations don’t necessarily require a complete upheaval in existing IT infrastructure. Financial institutions can certainly improve performance without significant risk through smaller, more targeted investments. The benefit of lightweight technology integration is twofold. Firstly, implementation is relatively rapid and avoids deep integration into complex legacy systems. This means less time spent on functional testing, fewer resources dedicated to integration, and faster time to market. Secondly, the ease of deployment means banks can see how the technology fares with internal staff and customers. If there is widespread adoption, the technology can be scaled further efficiently; if there are barriers to adoption, it can be halted without significant side effects to existing processes. A safe-bet digital solution should enable banks to test their users’ appetite for technology and reap the benefits of digitization at a low initial investment.
- Acquire minimal client information from banks but still create deeper customer engagement
Financial institutions are entrusted with a plethora of confidential client data and it’s their fiduciary role to safeguard this information. When choosing a digital tool, banking executives must select a partner who commands or uses client information in a secure, controlled environment and is incentivized in the right way both financially and strategically. This ensures a bank to have the greatest supervision of confidential data and stronger customer relationships without the threat of being disintermediated. In the UK, the FCA has pioneered the Regulatory Sandbox initiative which is great milestone for banks and Fintech looking to partner; but for markets that have not established such sandbox environments, banks should be both prudent and aggressive with their risk-reward analysis.
- Couple the digital experience with a human touch through the entire customer journey
While many routine transactions continue to move online, human touch remains a crucial component in financial advisory and trust building. New customer experiences should bring together the best of online and offline banking. Going forward, high-touch services that meet high-value customer demand will be the differentiating factor in banking success. In order for banks to succeed in their digital transformation, they must equip their sales talent with digital tools that can help them deliver the right products at the right time to the right customers.
For corporate banking, digital engagement should start from the very beginning of business origination when customers have new business leads or ideas. Rather than offering fragmented digital solutions to customers, banks should be strategic and provide holistic digital offerings in order to capture the entire spectrum of their clients’ business needs. Banks will then be able to follow through the customers’ entire decision making journey, they can effectively execute a pull strategy and ultimately win customers’ share of mind. Banks are operating in a highly competitive environment today and customers tend to be multi-banked. By offering a seamless digital experience starting from the very beginning of business origination, customers and bank managers can enter into a loyalty cycle.
Today’s landscape of changing customer demands and expectations, disruptive technologies, and new players has spurred significant changes across the global banking industry. However, banks must remain diligent in their digital transformation and be strategic in their partnerships. Lightweight IT and capital investments, controlled sharing of customer information, and high-touch customer experiences are three critical components in a Fintech solution that will enable banking institutions to quickly add value to their customers and shareholders. Banks should look for these elements in their digital enablers and partners in order to succeed in their transformation.