Digital Transformation

Top three best practices for Banking and Financial Institutions
Top three best practices for Banking and Financial Institutions 1024 546 InfoVision Admin

Top three best practices for Banking and Financial Institutions across their digital transformation journey

Digital transformation is all about providing little extra benefits on online and mobility platforms. The classical banking approach needs to integrate digital speed and ease with human interference that is both practically accepted and aiding at important times in the customer success roadmap. Eight out of ten financial institutions accept that the implication of advanced digital technology will profoundly change the banking industry and will completely change the domain’s competitive scenario.

To create a flawless strategy on digital transformation, banks and financial institutions needs to consider the following best practices across the digital transformation journey:

(1) Improving the customer success procedures

The road of customer journey currently getting much advanced. Banking and financial institutions need to identify what is crucial in the customer journey — which is going to make a remarkable difference and will create a major impact between contrasting consumer segments — and then work continuously to improve the consumer experience.

A digitized environment is not only implemented to fetch happiness to consumers, it also provides open hands to employees for more important tasks like cross-selling and maintaining a relationship while simultaneously lowering the operation cost by smoothing processes. Even changing just a few processes can create a major impact. According, to BCG one large bank modified its credit lending process and reduced the timeframe from application to funding in half, saving 30% in costs related with the procedure. Another bank tackling the same process saved nearly $200 million in tenure of four years.

(2) Implementing Data Analytics

Data analytics emphasize banks to get a better insight into their consumers, determining new and efficient business opportunities and lowering operational costs. Business intelligence and advanced analytics permit financial sectors to flawless predictions in loan defaults or to identify defaulters, consumers who are underpaying the loan etc. The use of granular cluster analysis is a good idea to analyze a consumer product mix and average for that consumer type and using these derived insights helps the sales team to pitch the product more efficiently and strengthening the relationships.

Banks and financial sectors can implement data mining for better expectations and customer targeting. On the promising side, generating important leads and establishing connections between current and prospective clients. Implementing behavioral analytics to recognize unsatisfied customers and then design separate action plans to retain these consumers.

(3) Redesigning the Operating Model

Consumers now a days want the best of both the segment: a digital outlook when they need pace and benefit and a human affair when they seek support and advice for more complex banking products such as investments or mortgages or trading in stock markets when they have a blockers or issues. BCG suggests that the percentage of customers who want an integrated experience has raised to 43% from 36.8% in 2015.

Banks and credit institutions that integrate human interaction with digital and owned functionality is what BCG terms a bionic network and can anticipate to a 15% growth in revenue, up to a 35% depletion in branch operation costs and up to 15% rise in customer satisfaction.

Digital Transformation Derailment
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Digital Transformation Derailment

Why Are Companies Hitting Roadblocks in Their Transformation Efforts?

No leader today needs convincing when it comes to digital transformation (DX). In fact, it’s all that we hear about at leadership conferences and symposiums.

The rules of digital transformation do not change with the change in business scale or size. Many enterprises – big and small – are making serious investments into it. However, they are running into roadblocks that are derailing their DX journeys. So, what is causing these roadblocks and why?

Focus Only on Adding New Technologies

It’s true that IT and technology plays a major role in DX. However, it is not the whole of DX. Most of the companies are too quick to invest in technologies like cloud, big data, automation, AI, machine learning, etc. They believe that once they have things in place, life will be easy. If only that was the case!

Embracing these technologies is not enough. You also need to have the processes in place to support these technologies.

We know that some business processes can be easily modified for DX. But there are some business-critical processes that cannot be reengineered easily. The legacy of these processes can also be partly due to legal regulations in place.

Adopting new technologies will only help you modernize your business. But without right kind of processes, you may not be able to transform at all.

Building on Top of Legacy Infrastructure

When discussing DX investments, many business leaders choose to invest their bucks in developing new apps and software. They believe that this would help them keep their technical debt under control and also accelerate their ROI realization from DX investments.

This strategy may work for many businesses, but this is a short-term solution. You cannot keep on mounting higher DX investments over an aging infrastructure. While it may solve your technical debt problems today, it will add more bigger problems to the milieu in the long run.

This kind of approach leads you nowhere and in fact leaves you stranded in dire straits.

This is precisely why CEOs need to step up and lead the digital transformation initiative and not let individual functional heads drive it. With CEOs at the front, the functional heads will have better collaboration which will lead to better strategic decisions.

Gaps at Strategic Levels

In many cases, we have seen that functional heads are individually driving the DX efforts. This means their focus at times is limited and they may not see the big picture. So, if the technology heads are leading DX they would develop competencies that they believe are needed. However, these competencies may not deliver fully on their potential due to lack of business context. The same is true for business leaders as well.

Both the leaders invest in developing competencies which may or may not interoperate with each other. This is what has been creating major gaps in digital transformation. Such siloed approach can only lead to a fractured strategy and execution.

Not Having the Right DX Partner

Many businesses invest in DX on piecemeal basis. For technology they may work with a particular IT vendor while for business processes realignment they may join hands with another service provider.

When this happens, no particular partner gets the full vision of the business and ends up delivering services that meet the need of the hour.

However, if you have one DX partner working with you on every single aspect, then it leads to better strategies, executions, and deliveries.

Now, we know it can be difficult to find a company that is good with all the aspects of digital transformation. After all you need somebody who understands technology, operations, business models, culture, people mindsets, existing skills, etc.

A good way to go about here is to engage with a digital transformation consultant on a trial basis. Talk to them to see if they really get your vision or not. A larger and broader engagement can be decided after your first interaction.

Getting a single partner to look into all your technology and operational level requirements will be the best decision you can make for your business. It will save you money and efforts while setting you on the right path of digital transformation.

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