It should come as no surprise to any financial institution that digitization is the biggest disruptor for any business at the present time. Today’s range of digital tools offer banks great opportunities to boost the level of service they offer and optimize their costs through effective use of the latest technology. And as more customers become digitally-focused across everything they do, banks must react accordingly in order to meet consumer demands.
Yet despite the advantages that digitization can bring, few retail banks have yet to fully embrace this. As I explain in this whitepaper, there are several key issues that prevent banks developing a fully digitized business strategy. These include a reliance on legacy IT infrastructure, a siloed organisational structure and the lack of a comprehensive vision and plan for making the transition.
However, tackling these problems is vital, as a strong digital strategy plays a vital role in building an effective omni-channel business.
Transforming customer outcomes
From an omni-channel perspective, one of the key benefits of digitization is its ability to greatly improve outcomes for end-users – both employees within the business and customers. This will come about as a result of better automation and efficiency, leading to improved decision-making processes and, in turn, higher revenues.
“We found that companies that had 50 percent or more of their revenues from digital ecosystems and understood their end customers better than their average competitor had 32 percent higher revenue growth and 27 percent higher profit margins than their industry averages.” [Weil and Woerner, MIT Sloan Management Review]
To do this, businesses must recognize that digitization isn’t just about the technology. Throughout the process, banks must ensure their focus is on the business and customer outcome. This means asking questions such as;
- How can we sync all of our channels?
- How can we improve customer journeys?
- How can we allow customers to conduct a transaction or a service at their convenience?
- How can they experience a consistent journey and similar outcomes regardless of the channel they choose?
- How can we enable personalization across all channels?
Answering these questions effectively means putting digitization at the core of all elements of a bank’s business. Organizations must develop a holistic picture in order to build a digitally-focused business that is responsive to the market, and customer needs. To do this, an agile technology infrastructure that is able to adapt to emerging technologies such as mobile, AI, virtual reality, chatbots and biometrics is essential.
The key role of big data connectivity
Strategies to make better use of data in banking processes will also need to go hand in hand with digitization efforts. In today’s environment, data is the glue that brings every part of digital transformation together and enables the kind of insights that businesses need to improve their service.
Banks currently create and store huge quantities of data, from personal details about their customers to in-depth records of their transactions. However, collecting this data is only half the job. In order to successfully manage an omni-channel business, banks must get this data into the hands of those who need it quickly and effectively. If it is just sitting in silos, unable to be accessed by large parts of the organization, then it is going to waste.
“60 per cent of financial institutions in North America believe that big data analytics offers a significant competitive advantage and 90 percent think that successful big data initiatives will define the winners in the future.” [Big Data: Profitability, Potential and Problems in Banking – The Financial Brand]
To make data work for banks, research from Bain and Company suggests they need four things: quality data; up-to-date analytics tools; skilled personnel; and a clear intent for what he want to achieve with the data. However, just four percent of companies say they are able to tick all four of these boxes, despite the widespread recognition of the importance of data.
“Nine out of ten business leaders believe data is now the fourth factor of production, as fundamental to business as land, labor and capital. The study among over 600 C-level executives and senior management and IT leaders worldwide indicates that the use of Big Data has improved businesses’ performance, on average, by 26 per cent and that the impact will grow to 41 per cent over the next 3 years.” [Rising Impact of Big Data on Decision Making – Capgemini]
The volume of data banks have available is growing rapidly – a trend that will only increase as a result of the open banking revolution. Therefore, if banks want to embrace omni-channel, deliver the best quality service to their customers and keep up with their competitors, mastering big data is a must.