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Digital Transformation in Financial Services

digital transformation

Financial institutions are going through a major digital revolution. Traditional players are quickly transitioning to digital-first solutions while a new generation of banks and lenders enter the market built with digital experience at its very core. As consumers continue to rely on technology to manage their finances, moving into a digital operation and customer interaction is not a matter of luxury but necessity.

The Accelerated Rise of Digital Services

Though digital transformation had been on the rise pre-COVID-19, the pandemic has accelerated the need for institutions to connect with their customers through digital channels to survive the “new normal”. A recent survey from McKinsey shows that “responses to COVID-19 have sped up the adoption of digital technology by several years - and that many of these changes could be here for the long haul”.

For many institutions, the process started with the digitisation of paper-based processes such as credit card or loan applications. Moving these processes online into static forms helped banks keep all of their forms in one place and readily available for customers and employees. However, this still does not solve the disconnect across departments and the double-handling of data. 

According to a PYMNTS report, since April 2020 the use of mobile banking has risen 85% and the number of bank accounts open online has risen over 200%, which shows the accelerated growth of demand for such services and consequently customer expectations.

From core business to customer-centric

Traditional institutions have centralised core processes and operations so they can focus on selling a product and service in their own way. Today's consumers seek instant gratification across technology platforms, meaning that financial institutions have been forced to catch up with the way that consumers interact with service providers from other industries. The shift in customer expectations has forced financial institutions to rethink how they interact with their customers, especially through online channels.

As the pandemic has shaken all industries, it has given banks the opportunity to rethink their position in the current market and adopt strategies that align with a customer-centric approach, giving customers a highly personalised service. This is what can give genuine competitive advantage. With clearer and more defined consumers’ expectations for personalised interactions, a bank’s core must fully support a digital-first strategy. 

 

Focusing on Customer Experience

Even though digital transformation has an impact on all parts of the organisation, consumers are the stakeholders relying most on a bank’s ability to fulfill their instantaneous needs. As banks look to build better relationships with their customers and grow business in these times, what will contribute to a successful strategy will be focusing on the key pillars to digital transformation:

  • Delivering a consistent digital experience across all channels 
  • Understanding the customer journey
  • Highly-personalised experiences, specifically online
  • Seamless, low-barrier customer onboarding
  • Using the right technology

 

Looking ahead 

Digital is now the preferred way of consumers to interact with most service providers, this is especially true for banks and financial services. Though the spike in digital banking is, in part, a result of the circumstances surrounding the pandemic, it is very likely that going forward consumers rely more on digital channels. As all audiences become more technologically savvy, banks should embrace digital transformation and prioritise seamless experiences for consumers across all channels.