Digital Banking Disruption Has Only Just Begun

Organizations that embrace change, leveraging new technologies to support an innovation culture and challenger mindset, will be better prepared for ongoing disruption that will increasingly become the norm.

The pandemic created a sense of urgency within the banking industry as branches were closed and customers were forced to use digital channels to transact and engage with their financial institution. Many banks and credit unions developed new digital functionality, with organizations rethinking their back-office operations, their investment in technology, and their commitment to innovation.

As the world slowly returns to a new sense of normal, the best banking organizations will not return to business as usual, but will use their advances in digital banking transformation as a springboard to accelerate innovation and to reinforce a challenger mindset. This change in legacy thinking and culture will help future-proof organizations, making them more resilient and successful going forward.

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Digital Banking Transformation is an Ongoing Process

The most successful banking organizations are those that realize that digital banking transformation is not a “destination,” but a continuous process of iteration, adaptation and innovation that leverages emerging technologies to improve internal processes and deliver enhanced customer experiences. As the marketplace continues to change at a faster pace and becomes more volatile, those financial institutions that have reimagined legacy processes and embraced change as a competitive opportunity will be the best prepared.

In the 2021 Deloitte Global Resilience Report, 60% of the respondents said that they believe disruptions like those seen in 2020 will continue. Unfortunately, another of the survey’s findings found that 70% of the CXOs do not have complete confidence in their organization’s ability to pivot and adapt to disruptive events. The key is to be able to innovate through disruption.

According to an article in the MIT Sloan Management Review, the ability to innovate and digital transform an organization requires four organizational capabilities:

  • Nimbleness: The ability to quickly pivot and move from the current state to the desired future state.
  • Scalability: The ability to increase capacity to serve a greater universe efficiently and effectively.
  • Stability: The ability to maintain operational excellence during times of massive disruption.
  • Optionality: The ability to leverage external collaboration to expand capabilities.

The authors of the article stress that all of these capabilities require leveraging emerging digital technologies, such as applied analytics, artificial intelligence (AI), machine learning, cloud computing, the internet of things (IOT), robotic process automation (RPA) , etc.

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Emerging Technologies: The Enabler of Change and Innovation

With change happening faster than ever, the ability to react in real time to marketplace opportunities and challenges requires both modern technology and a culture that supports change and encourages innovation. According to the research referenced in the MIT Sloan Management Review, “When a company has the right culture to leverage the capabilities of a robust digital infrastructure, it is relatively easy to make quick decisions and repurpose that infrastructure for new challenges that emerge during disruptions.”

Organizations with a challenger mindset encourage experimentation and continual learning, support and organize around internal and external collaboration, and accept the potential of failure. This supports continuous digital banking transformation.

Using emerging technologies like cloud computing, data and analytics provides the capability to scale instantly based on changes in demand. These technologies also provide the foundation to continue excellent experiences while pivoting and scaling. By doing so, financial institutions maintain a level of internal and external confidence and trust.

The Power of Collaboration for Building Resilience

To maximize an organization’s ability to respond to digital disruption, financial institutions of all sizes need to leverage the capabilities and scalability of third-party organizations that can bring specialized solutions to the table. The concept of building from within has given way to collaborative efforts that improve speed of delivery.

“This robust ecosystem of partnerships helps banks and credit unions experiment, learn, and, ultimately, import capabilities that are necessary to adapt to acute and chronic disruption,” states the MIT Sloan research. “Ecosystems enable organizations to operate more flexibly, providing access to more collaborators and a greater range of potential innovations, thereby increasing the volume, quality, and risk tolerance of experimentation and learning.”

The combination of visionary strategies that break free from legacy norms, and the ability to leverage emerging technologies for competitive advantage, creates a challenger mindset and resilience in existing cultures. This empowers entire organizations to respond effectively to current disruption and positions these organizations to be more future-ready and financially secure.

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