What is digital transformation? Gartner defines it as the creation of new business designs that blur the digital and physical worlds to reach goals that could not be reached earlier, faster, or cheaper, otherwise.
This is a journey that started with the rise of the internet and web interface technologies, revolutionizing the way financial services companies conducted communication, transactions and outreach. But these new digital business strategies weren’t initially connected or integrated to existing channels, or aligned to the way consumers behave. They tended to be an after thought or a side project — a stand-alone initiative in its own silo, much like installing new office carpeting or designing employee appreciation events — not an integrated component of a financial institution’s overall delivery model.
Even when digital technologies were implemented, other manual processes still prevailed. Take this example from days gone by: a customer submitted an online application for an insurance policy. The agent manually printed it out for processing, and then sent a stack of papers back for the customer to sign. Upon receipt of the signed paperwork, the agent processed the newly signed papers and then converted them back to digital copies for archiving. Processes like these were designed to work around – not to integrate with – digital technologies.
Today, however, the journey of digital business is finally starting to mature, fueled by a combination of both technology and cultural trends. Leaders in the retail banking industry are faced with a critical decision: Do you ride the digital business wave or do you turn back to the relative comfort and familiarity of traditional, branch-centric delivery models?
The rise of next-gen digital delivery models is in part driven by technology trends — device proliferation, hosted applications/platforms, 24/7 internet connectivity, and the maturation of big data and cloud solutions. The increased expectations of consumers and workers who are increasingly comfortable with digital technologies are on the rise; they expect to use them in every aspect of their everyday lives, and that includes financial services.
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According to a CEB report commissioned by Citrix, Moving at the Speed of Byte: Ushering the Era of the Digitally Enabled Financial Institution, consumer preferences for completing transactions through digital channels has gone up from 28% in 2010 to 41% in 2015. Banking customers increasingly prefer digital methods that allow for quicker ways to check balances or pay bills, with a 10% increase for mobile, and almost 20% decrease in ATM transactions from 2013 to 2015.
Consumers expect a seamless digital experience, with constant availability and ironclad security. It makes things easier, more flexible and more convenient, as less time is required to complete transactions and processes — with no travel necessary. At the same time, consumers have not given up on the traditional channels. From 2013 to 2015, there was little to no change in the number of banking consumers who used in-person services (33%) and call centers (roughly 20%) at least once per month.
How can financial institutions successfully ride the wave of digital transformation? The key is not to treat each digital channel individually, but to embed and integrate digitization throughout the organization. The goal is to provide a more personalized, timely experience by integrating digital technologies and automation into existing channels, workflows and process.
Financial institutions that want to capitalize on digital transformation should consider the following principles when designing their experience.
- Ensure people — both customers and employees — are at the center. Eliminate complexity and streamline user-facing processes where everything works intuitively and consistently.
- Provide the network, apps and data for people to work and to complete transactions wherever they are. This means giving people their choice — any device, anywhere. And the apps must be secure, reliable and perform as expected.
- Make sure people’s interactions with digital channels yield a great experience. For instance, moving seamlessly across a diverse mix of devices and locations throughout the day securely. Design security protocols so that they are not cumbersome and do not impeded on the user’s satisfaction.
And then what does a successful digital transformation look like? Here are some examples:
- A banking customer’s online application form goes straight to processing agents who can immediately open the account using the same digital platform.
- Customers can sign documents immediately using digital signatures and file sharing, and be notified of progress in a timely manner. Or, if they prefer to meet in person at a local coffee shop to complete paperwork, a representative can still offer such digital workflows via a tablet.
- Using their mobile apps, insurance customers can immediately file claims in the case of an accident, or the agent can go onsite to kick start the claims process. They can take photos of the damaged car and send them via a mobile app.
The digital transformation of financial institutions is the critical next step for the industry, especially in today’s hyper-competitive marketplace that serves ultra-savvy consumers. With the right approach and focus, banks and credit unions can be more agile and responsive, resulting in higher customer satisfaction that translates to tangible business benefits (e.g., bottom line ROI).