"The Great Reinvention: The Global Digital Banking Radar 2023" is a study that ebankIT made in collaboration with Qorus. It emphasizes the evolution of the banking industry prompted by the pandemic and highlights how it triggered a wave of digital adoption across banks, having an influence on both their internal processes and customer-facing practices. The report identified 7 markers for banks to have a successful reinvention.
7 markers for a successful reinvention
The digital innovators of today are giving priority to their digital transformation and focusing on the right mix of channels, providing solutions that better fit the demands of their clients, and supporting ongoing innovation.
The Covid-19 pandemic has been instrumental in this evolution, forcing banks to review and modernize customer-facing processes and expedite their digital transformation initiatives in a way they never thought possible.
Roberto Ferrari, Digital Reinvention Community Leader Qorus
1. Embrace digitization
Due to the necessity of being competitive and compliant in a digital environment that is continuously changing, the financial sector is going through a critical modernization phase. In order to efficiently connect systems and exchange data, 33% of survey respondents said their digital transformation activities required an enterprise-wide transformation strategy.
However, regulators are the biggest external barrier affecting a bank's efforts to adapt digitally, which is not unexpected. Regulators frequently fall behind as technology develops quickly. Banks are by nature regulated institutions since they deal with their client's money and play a big part in the economy and society.
2. Focus on the right channels
Client tendency to adopt digital channels is strong, exceeding 70% in every geographic area and age group, according to a recent McKinsey study. Banks must figure out how to improve their digital strategies while still providing the reassuring, personal interaction that clients have grown to anticipate when they visit a branch.
As our customers are becoming more digital, their needs and wants will continue to evolve. We believe we will need to increasingly allow them to service their own financial needs and provide them with value added services, financial tools and AI digital capabilities.
Pablo Ruiz Correa, Director of Innovation and Digital Business Strategy, Banco Cooperativo Español
Every channel must offer a tailored and optimized experience. In fact, personalization has come up repeatedly in every interview we performed for this study.
3. Deliver more customer-centric experiences
Innovation projects must be centered around meeting the needs of clients. Banks must address the account opening and onboarding process, which is a major source of frustration for consumers, in order to improve the customer experience. Onboarding drop-offs can cost financial institutions approximately €5 billion annually.
Data is essential for a bank to give an enhanced experience to its clients. According to the survey, 65% of respondents agreed that personalized services based on individual needs and preferences are necessary for future success.
4. Continuous innovation
Banks agree that in order for them to be the most successful, they should embrace technology with an eye toward the future. According to the survey, respondents have a positive outlook toward their organization's attempts to innovate. 65% of them have reported having successfully developed an innovation roadmap, and a customer-centric strategy is being used by 72% of respondents who said their firm is focusing its innovation efforts on its own consumers.
5. Compete with digital disruptors
Concern over the threat presented by Google, Apple, Facebook, and Amazon (GAFA) was stated by 56% of respondents. These software giants have access to enormous quantities of client data and are reshaping the digital banking industry by leveraging it to deliver highly tailored financial experiences that rival traditional banks, but their products are also far more feature-rich.
Banks must provide consistent, positive client experiences in both physical and digital spaces in order to stay relevant, while also learning more about each individual client's needs and preferences. They must also adapt their business strategies, create fresh sources of income, and collaborate with GAFA on particular initiatives like Apple Pay or Google Pay.
6. Implement the right technologies
Artificial Intelligence was identified as a key technology being developed in the future to produce new products/services and client onboarding. Banks are making significant investments in AI and anticipate that a broad audience will accept its initial business applications. Open finance, AI-based risk finance, DLT, and cryptocurrencies, on the other hand, need more time to mature.
7. Act fast
Almost 70% of respondents say that to launch a new digital feature it takes between 6 months and 1 year. Clients should not have to wait this long, especially because Neobanks may launch products in less than three months.
In order to enable financial institutions to launch products and services much faster, banks require a ready-to-market solution with improved product flexibility and comprehensive customization choices. A quick path to success could be to implement an omnichannel digital banking solution. Learn more about how by reading the full report about digital reinvention.