11 Digital Banking Commandments You Can’t Afford to Ignore

These practical, specific and often unconventional rules for digital transformation in financial services distill some painful lessons into quick real world advice.

The trouble with following conventional wisdom is that it’s always changing. Blindly following conventional wisdom never produces a straight path and rarely results in arriving at your desired destination. This explains the billions of dollars that banks and credit unions sink into failed digital transformation initiatives each year.

A Painful Digital Reality:

The truth is that conventional wisdom can’t reliably get you where you need to go — but earned wisdom can. This comes from trying and failing, and from discovering firsthand what works and what doesn’t work. Earned wisdom takes time, and it can be painful.

Having had the opportunity to partner with hundreds of leading financial institutions, my earned wisdom on what works in the aggregate for these institutions can be distilled down into the following 11 digital banking commandments — sometimes unconventional rules that financial institutions should follow to improve the results of their digital transformation initiatives.

I trust that these commandments will be valuable in shaping your digital strategies because, to paraphrase a favorite movie quote of mine, “these go to eleven.”

1. Digital Lift-and-Shift Is Not a Strategy

Digital transformation should be seen as an opportunity to build something fundamentally new. It means utilizing modern platforms and software to make your banking experience better across all channels. You cannot simply carry over analog assumptions or digitize a legacy, paper-based process. Use this opportunity to completely reimagine things.

Consider the digital account opening process. Why does it require a form? Could it be an interactive chat with a virtual assistant instead? You can collect relevant information during the flow of conversation while also making it enjoyable and personable by responding in context.

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2. Friction Is Not Inherently Good or Evil

Unintentional friction in the customers’ experience is always bad. However, thoughtfully designed points of friction can be extremely valuable for managing risk and can actually make people feel safe. This means using data analytics to apply the appropriate amount of friction based on risk level.

Small UX improvements (like real-time address lookup) can have a big impact on customer experience. An incorrect customer address poses 
little actual risk of fraud, but verifying it or making customers retype their address adds unnecessary friction to the process. Instead of having customers enter each piece of information manually, streamline the data entry experience by making real-time suggestions, which also reduces errors.

3. Be Personable in This Impersonal Channel

Personalization isn’t about selling products – it’s about making customers feel comfortable and valued during every interaction they have with you. As a financial institution, you already have enough customer data 
to make subtle adjustments that can create a better experience.

Be enthusiastic and make customers feel like they make a good choice opening your app. Use location data to say “Good Morning!” or “Good Afternoon!” depending on the time zone where the customer is located. Simple personalization that’s prominently displayed is the digital equivalent to a teller giving you a big wave and smile as you walk into the branch.

4. Respect the Data

You ask customers for a lot of information. Respect the fact that they’re sharing their data with you by actually using it to deliver a better customer experience.

Pulling together multiple accounts into a unified view and sharing insights with customers creates engagement. Yes, it takes work to pull data from different silos for an integrated view, but it is worth the effort and cost. Constantly reevaluate the UX in order to add new functionality and meet higher levels of customer expectations.

Compensate Consumers for Their Information:

The data that people share with you, explicitly and implicitly, is an asset. Demonstrate to customers that you value it and that you’re using it to provide them value in exchange.

By delivering insights frequently and in granular detail, you’re providing a level of transparency and awareness that customers now crave.

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5. Engage Them, Teach Them, Feed Their TikTok Obsession

Consumers want to master their financial lives. They want content that will teach them how, but they have very high standards. What can financial institutions learn from TikTok? It has a tight set of constraints that forces you to create content that’s quick, compelling and easily understood.

Making enjoyable financial services content isn’t easy, but the medium matters a lot. Videos need to have lots of movement and good visual examples keep your audience’s attention — and don’t be afraid to add some music.

Also make sure your content is easy to like, comment and share. You want customers to engage, and shorter videos give them a reason to come back and watch more. Create content not just to educate existing customers, but also to use as a broader opportunity for organic growth.

6. Use Your Branch Wisely

In 2019, 83% of American households with bank accounts visited a branch at least once in the past 12 months. This suggests that the branch’s role as a place to resolve critical problems or get advice remains important, even as its role as a transaction center declines.

Don’t Flip the Priorities:

Branches can be a differentiator, but only if they are used in the service of your customers’ goals rather than your own.

You don’t want to get rid of all your branches, especially now with Covid-19 vaccines becoming increasingly available. Branches continue to provide security and comfort, and they’re a way for banks and credit unions to build trust. The challenge is to make the most of the branches you have.

7. Respect Their Time and Match Their Effort

“Going digital” isn’t about streamlining interactions to the maximum extent possible. It’s about optimizing each interaction so that the value the consumer gets is commensurate with the time and effort they invest. When customers engage with your bank, use data from that interaction to better understand them and supply them with personalized, actionable insights.

Start with low-hanging fruit by tackling opportunities that add value to customer interactions but don’t require much additional work or expense on your part. Surfacing actionable insights, like your customer’s updated credit score, is an easy way to add value to a routine interaction.

8. Pester Them … But Only When They Want It

Transparency and control are vital concepts when dealing with money. Consumers’ definition of pestering in financial services is very different than it is in other industries. By providing simple notifications, you can keep customers in the loop on important changes to their accounts.

When it comes to money, people want to know what’s happening. Timely communication, through the right channels, makes them feel in control. Give your customers the power to decide how often you will communicate with them by letting them set notification limits.

9. Be Fascinated by Your Customers (Not Your Technology)

It’s easy to make the mistake of assuming that your customers or members care about your technology just as much as you do. But they really don’t.

The most sophisticated digital technology can’t replace an obsessive focus on and knowledge of your target customers.

Make technology investments based on helping consumers get a better, more personalized experience. Demonstrate that you know who they are and what they want.

Don’t let your customer experience muscle get flabby – focus on showing people that their experience has improved, rather than explaining how or why.

10. Make People Feel Safe

As noted earlier, bank branches will never completely vanish, and that’s in
part because they engender a certain level of trust for many customers.

Remember this Basic:

Trust in financial services, at a foundational level, is about safety. You need to find digital ways to replicate that sense of comfort and security in all of the small digital interactions your institution has with consumers.

Use digitization in a way that continues to reinforce your customers’ trust in your financial institution. (A little friction in the service of security can help accomplish this.) Remember that people bank with you because they trust you, and digitization should not change that.

11. Come Together Like a Symphony Orchestra

The best digital transformations result in data, systems and process all working together like a finely-tuned orchestra. It’s painfully obvious to people when a digital experience is disjointed— they can see the seams. You need to invest in integration and orchestration. Testing is key. Sweat the details!

“Only those who have the patience to do simple things perfectly will acquire the skill to do difficult things easily.” — Friedrich von Schiller

Realize Your Institution is Boarding a Long-Haul Train

Digital transformation never stops. People’s expectations evolve, new competitors emerge, and legacy systems and processes age as new channels and devices emerge. Success requires continual reinvention, adaptation and a willingness to experiment.

Banks and credit unions no longer compete on products, but on experience — and today’s consumers compare their banking experience to the experiences they get from companies like Apple and Uber.

Although the perils of investing poorly in digital infrastructure remain, it is a transformation that your financial institution needs to undertake … and sooner rather than later. Fortunately, technological advancements are making it increasingly more achievable to digitize your operations in a way that supports your institution’s strategic goals, provides your customers with a great experience, and adds to your bottom line— especially if you adhere to these guidelines.

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