Digital Transformation: Blending Design and Data in Banking

We’re in the midst of one of the largest transformations in banking history. Today, a coffee company runs one of the most successful mobile payments systems in the world. Large retailers are offering loans directly to consumers. Internet firms are wrapping financial products around their core services. Lending is going social and disruption is everywhere.

Banks are up against a new reality in which fast changing consumer behavior and financial technologies are roiling traditional ways of doing business. Tomorrow’s loan and mortgage products will be decentralized and crowd-sourced. Social finance will become widespread, touching all aspects of banking — from borrowing to investing. Robot advisors will prevent consumers from making unsound financial choices, and will do so in real time

But when it comes to digital, many banks are headed down the wrong path. Their focus on launching mobile apps that support existing products, streamline online channels to reduce time and friction for consumers, and dabble with existing technology infrastructure will deliver short-term benefits at best. Instead, to propel their digital transformation strategy, banks need to design products that are easier to use and leverage data in a more sophisticated way. Here’s how:

1. Focus on pre- and post- payment experiences. Personalize banking products and design them so as to reduce friction. Satisfy consumer tenets of "know me," "value me," "give me what I want," and "inform me," across the pre- and post-payment journey. For instance, when consumers buy a home, banks can facilitate access to publicly available school ratings and neighborhood crime rates, and schedule a home inspection. Post closing, banks can automate monthly payments and alert consumers whenever there is an interest rate adjustment or other change to the loan. The goal is to create an experience that’s wrapped around the bank loan product.