It is undeniable that the financial industry is evolving at lightning speed. With new technologies appearing and put to use each day, banks must stay diligent in their digital efforts to keep up with their competitors.
To stay ahead in this technological era, banks need to embrace the 3 pillars for digital success: digital transformation, open banking, and automation. With these three factors secured with a bank’s business model, an institution can overhaul traditional practices and regain a competitive edge.
Staying ahead of the curve is crucial for financial institutions, as overlooking the need for change can lead to long-term consequences and a decline in business. In this article, we will discuss the challenges banks are facing and the 3 pillars needed for success.
The Digital Challenge Facing Banks
As the financial industry becomes more digitally-oriented, banks must work to overcome the associated challenges. The digital revolution affects all aspects of finance, from customer satisfaction to compliance.
Deloitte recently released their report Digital Banking Redefined in 2021. In this report, they uncovered that more than 70 percent of customers expressed willingness to switch from cash and check payments to digital payments.
The report additionally identified two primary challenges when it comes to designing meaningful banking experiences:
- Poor Customer-Centricity: When banks strive to create unique and emotion-based experiences for customers, the key is to maintain a customer-centric approach. Rather than focus on superficial customer needs, it’s important to focus on differentiating and personalizing services for customers.
- Common Challenges: Many banks encounter hurdles in digital transformation with highly common challenges, such as struggling to constrain the expectations of investors or preparing their institutions to adapt to FinTech.
To overcome these challenges, banks must embrace new technology and innovation that help them keep up with shifting customer and industry expectations.
The 3 Pillars for Success in Today’s Financial Industry
1. Digital Transformation
Digital transformation refers to the set of services and strategies that transform a financial institution from front to back. This process aims to boost the scalability, accessibility, and cost-efficiency of a bank by employing cutting-edge technologies and platforms.
A total digital transformation will include services such as:
- Platform Implementations: There are many great digital finance platforms out there that allow an institution to integrate legacy systems and update outdated digital infrastructure. With the right platform and supporting team, a bank can easily streamline and optimize its workflows.
- Cloud Migrations: Cloud computing allows for entirely digital operations that are accessible to authorized personnel from anywhere at any time. By migrating to the cloud, banks can ensure they have long-term cost efficiency while also boosting profitability.
- DevOps: DevOps is the union of development and operations teams to provide customers with faster deliveries of software, products, and updates. Customer-centricity is a core component of DevOps, making it a necessity for institutions aiming to refocus their approach away from the enterprise and onto the customer.
- Omnichannel: A major advantage of offering digital financial services is that your customers can carry out essential tasks and activities through their preferred channels. Omnichannel is an approach that ensures each channel offers the same, full range of services to customers and staff.
- AI and Predictive Technology: As part of the shift towards embracing technological innovation, most digital transformations will incorporate AI and predictive technology. These help banks to make faster and smarter decisions, while also easing the workload on financial teams.
2. Open Banking
Open banking is a method of banking that enables financial institutions to share customer data and information under a set of strict conditions agreed upon by the customer. The process uses APIs (application programming interfaces) that allow institutions to connect their digital platforms and systems for information sharing and transfers.
Open banking offers 3 key benefits to financial institutions:
- Better Customer and Business Data: With open banking, institutions gain access to much larger and more detailed sets of data. This can help with everything from improving the customer experience with more personalized recommendations to making more foresighted business decisions.
- More Collaborative Opportunities: Open banking inherently enables collaboration. Financial institutions that may have historically remained separate are given opportunities to collaborate rather than compete, enhancing the customer experience and encouraging innovation.
- Increased Digital Agility: When a financial institution embraces open banking, they gain a much higher level of digital agility. Banks have greater insights into upcoming changes or shifts in the markets, allowing them to plan accordingly.
The ability to automate essential processes comes as a major benefit for financial institutions that carry out full digital transformations. Primarily powered through AI and machine learning, automation allows a bank’s systems to operate much faster and more seamlessly.
Through automation, a bank can:
- Boost Productivity: Automation removes the responsibility of maintaining digital systems from the shoulders of a business team. As such, more of their time can be spent focused on customers and furthering innovation within the institution.
- Keep Up with Regulatory Change: Compliance is getting harder and harder to maintain. With new regulatory changes appearing every week, automation helps banks to update their risk and regulatory models quickly and efficiently.
- Offer Personalized Support: Automation does more than just optimize back-end processes. It can also be used to create an AI-based support systems that interact with customers to provide advice and recommendations.
Final Thoughts: Get Ahead with CPQi
The banking industry is changing at a rapid pace – and CPQi is here to ensure your bank stays ahead.
We offer comprehensive digital transformation and automation services that fit within your budget. Our expert teams are highly trained in both finance and technology, so you can rest easy knowing the financial and legal needs of your institution are met.
For more information on our custom solutions, or to book your first consultation, contact CPQi today!