Undergoing a full digital transformation can be quite a difficult task, especially for incumbent banks. Though it has become the number one priority for many banks within the last few years, many financial institutions (FIs) still struggle in ensuring a successful transformation, as they lack the proper insights on implementing the right strategies across the organization.

A digital bank is mainly referred to as banks that can deliver their financial services through the internet (or virtually) without having to rely on physical branches. Digital banking offers a variety of conveniences to the customers following the “new normal” as remote interactions is now the preferred methods across the globe.

As the financial services industry is becoming more and more responsive towards technological disruptions and market trends, they have to find the balance between the need to provide agile, mobile-centric solutions and ensure top-tier security across all their platforms.

Why effective digital banking strategies is essential for banks

The industry is experiencing a surge of competitors as many alternatives of banking firms have started to risen.  From fintech to new entrants such as Google, Alibaba, iTunes, and Starbucks, which offers on-demand, immediate gratification cloud businesses; accumulating massive customers and followers, banks need to completely reinvent their business models in order to stay relevant.

However, a significant disparity can be observed from FIs worldwide when it comes to having a digital strategy in place and actually implementing it. This is illustrated from BDO’s report titled 2021 Financial Services Digital Transformation Survey, in which that they found although 97% of middle market FIs already have a digital strategy in development, only 30% are actually implementing it. It appears that though FIs are aware on the growing pressure of investing in digitalization, they are yet to put their plans in action.

For the full implementation of digital banking strategy, several critical aspects need to be taken into consideration from the outset. Below are the five recommendations for FIs to follow in avoiding common mistakes and adopting a winning digital banking strategy.

5 winning elements of a digital banking strategy

1. Focus on creating a customer-centric mindset

The ongoing COVID-19 pandemic has completely redefined the way banks form relationships with their customers, as the way consumers utilize financial products and services started to change. A major shift towards online interactions and higher demands for mobile and internet banking can be observed due to customers’ preference for going fully digital.

To accommodate this surging demand, digital banks need to engage with their customers differently – instead of focusing on their product features, FIs need to become more customer-centric instead, putting them at the heart of their offerings. Integration of personalization and positive experiences must be guaranteed in order to form an emotional connection.

Banks must concentrate their efforts in embedding customer-oriented mindset at every level of the organization. Said mindset must be adapted in all operational and strategic processes, and it requires the organization’s full capacity to adapt quickly and remove outdated practices.

2. Innovation at the core of all strategies

Being innovative requires more than simply thinking ahead. It also entails challenging the norms and reforming existing structures, keeping the bank open to constant changes. In producing an effective digital banking strategy, the right business decisions must be taken from the outset, and this requires supreme agility and adaptability. 

It is vital to integrate creative ideas when rethinking the bank’s business models. Apart from leveraging on the latest technologies, it is also worth noting that FIs need to cultivate a collaborative environment that celebrates innovation and creativity instead of solely practicing risk-averse mindset. By prioritizing innovation in all of the digital strategies, banks can gain long-term benefits and better positioning in the market.

3. Data analytics utilization

Adopting advanced technologies such as artificial intelligence, machine learning, and big data is essential as it provides real-time data of bank consumers, which is needed for banks to further build relationships as they can leverage on the data to improve the customers’ digital experience.

For instance, by analyzing the customers’ behavior trends for the past six months, banks can anticipate emerging habits and be prepared with the most optimal solutions. These data can guide the bank’s decision in deciding which digital banking solution will provide the most value to the customers. Focus on uncovering potential segments that are not yet tended to; such customers that could benefit from a loan refinance. Read more: https://www.toptal.com/finance/data-analysis-consultants/data-analytics-in-banking

4. Collaborate and seek industry partners

Instead of relying solely on the organization’s internal resources, banks need to realize the importance of seeking the right partnerships and collaborations in order to develop a fully digital ecosystem to their consumers. Consider going cross-industries or even collaborate with a distant competitor to strengthen the brand’s presence digitally and illustrate just how big of a value the bank can provide to the customers.

It is important for banks to rethink their approaches and find a way to always be involved in customers’ day-to-day transactions, improving their end-to-end customer journeys and eliminating any possible payment issues that can cause them delays and frustrations.

By leveraging on the partner’s experience, customer base, and innovations, banks can gain deeper insights to refine their entire operations and processes, widening their customer base and allowing them to better serve the undeserved.

5. Constant regulatory compliance

With this constant race among banks to become the most innovative and technologically advanced, there is a slight chance for banks to miss few miniscule regulations that need to be adhered when it comes to creating new technologies. When it’s leave unattended, minor legal issues can snowballed into something damaging both to the bank’s reputation and operations.

To prevent this, it is imperative for FIs to create a solid and detailed framework that includes  a thorough assessment whenever a new business plan is implemented. This eventually will guarantee the strategy used is sustainable and in line with current and upcoming regulations in the long term.

This is especially crucial as digital banking poses a lot of new risks, and banks need to stay alert in anticipating them. Risk frameworks, strong time management and regular check-ups equipped with the right technology will ensure banks to better identify and mitigate upcoming threats more efficiently.

Transforming digitally with INFOPRO

Embarking on a digital transformation has never been easier with INFOPRO, as we assist banks and FIs of all kinds in providing them with the best digital banking solutions each specifically tailored to their needs and circumstances.

Our suite encompasses more than 50 products offered across 35 countries globally. When it comes to choosing a partner that can assist you in terms of vast experiences and resources, INFOPRO is the top choice. Simply contact us for more information.