A look at key questions to ask for your digital transformation strategy. As they dive into digitization, many banks and credit unions are disappointed in the initial results. industry is on the cusp of a digital transformation right now. It will help you come up with creative solutions to level up your business in this digital … By employing digital channels or novel business models, incumbent banks can enter new geographies or market segments that would be prohibitively expensive targets using traditional approaches. Some banks have even gone farther and moved into nonbanking adjacencies (see outer ring in exhibit). Consumers are apt to think banks and credit unions have had ample time to figure out what Amazon is doing right and emulate it — e.g., “Why doesn’t my bank work like Amazon?? But according to research from the Boston Consulting Group, less than half (43%) confess they don’t even have a digital strategy. Mortgages (tied to home buying), auto finance (tied to car buying), and credit cards (tied to taxi/ride-sharing trips and restaurant visits) are examples of such products. Digital will also compete with other business units for IT services. The bank or credit union creates a new business unit and names a head of digital. A narrow focus on core adjacencies ignores the broader role a bank can play on behalf of its customers. What capabilities should be in place to go after these opportunities. The strategy can’t be a series of one-off à la carte initiatives taken on by separate and individual business units. In the evolving digital era, many new opportunities to offer services like this are emerging. Banks can grow by engaging with consumers at other stages of their decision journey. Boston Consulting Group reports that the percentage of consumers who want a hybrid experience has increased to 43% from 37% in 2015. Data analytics enable banks and credit unions to better understand consumers, identify business opportunities and reduce costs, says Boston Consulting Group. So what should traditional banking providers do to remedy the situation? Three Paths to Digital Transformation in Banking, Use Data and Next-Gen Tools to Drive Digital Banking Transformation, New Digital Technologies Will Disrupt Banking Forever, 2020 Acxiom Financial Services Review Now Available, Digital Approaches to Financial Education in the COVID-19 Era, Nearly Half of Americans Own a Contactless Card, Supporting Small Business Growth: One Bank's Approach to PPP Lending, 5 Credit Union Growth Strategies Centered on Payments and Financial Wellness, 17 Examples of Data-Driven Strategies from Top Financial Brands. Here are the top 21 digital transformation strategies recommended by businessmen and company executives who have successfully overcome the challenges of digital transformation and the pains associated with it. rural versus city) and customer segment per customer segment, to sum up just a few parameters. The first is for a bank to use its internal data more effectively for its own operations by adding new analytics capabilities. Ideabank and ING, for example, have extended into banking adjacencies (see middle ring in exhibit) by providing services like accounts-receivable management, factoring, accounting, and cash-flow analysis to small and medium enterprise (SME) customers. There are multiple ways to monetize data. We strive to provide individuals with disabilities equal access to our website. Globally, financial-services revenues have grown 4 percent annually over the past ten years (thanks largely to growth in emerging markets), and fintech start-ups and large tech companies have so far captured only tiny slivers of market share. our use of cookies, and And the impact on the bottom line is much smaller than they thought it would be. Just like with any major transformational initiative, you should begin with a strategy — digital is no different. Consumers increasingly want the best of both worlds: a digital experience when they need speed and convenience and a human experience when they need advice for more complex products such as investments or mortgages or when they have an issue or problem. A supermarket approach can allow banks without a strong position in such areas to grow in these segments as a complement to their current offerings. Decision 6: Buy or sell businesses in the portfolio? Commonwealth Bank in Australia (CBA), for example, wanted to play a bigger role in the home buyer’s journey. Post Bank, for example, has become the largest provider of mobile phone services in Italy. People create and sustain change. Press enter to select and open the results on a new page. Learn about Engaging across buying journeys can allow banks in such a position to gain access to a larger pool of potential revenue and enrich the overall relationship with their customers. Many banks and fintechs are locked in a battle over the customer-facing front end. Most banks have a rich set of exclusive information on their customers (key demographic details, where they live, their lifestyle preferences). Boston Consulting Group identifies three digital operating models: 1. Assure people that the change will not happen overnight. Struggling to See Value from Your Digital Banking Platform? It tells you how to win relationships. Siam Commercial Bank has identified five customer journeys — prospecting, advice and sales, onboarding, transactions, and administration — and is digitizing all of them, says Vish Jain, First EVP and Head of New Business and Operating Models. Read how you can send more relevant and timely marketing communications by synchronizing core systems, consumer and mortgage loan origination systems, and third-party data. hereLearn more about cookies, Opens in new Another is to create new offerings, such as reports or benchmark analytics, based on bank data. As we see it, many banks haven’t set their sights nearly high enough in response to disruptive attackers. Twitter In this paper, we present an 8-week sprint agile digital transformation approach that any bank can follow to build a pragmatic and market responding digital strategy by focusing on what makes a bank unique and unparalleled. Subscribed to {PRACTICE_NAME} email alerts. Banking Strategy, Digital and Transformation Latest thinking in respect to Banking Strategy, Digital and Transformation. The World Bank recently hosted an event on why now is the time to bridge the digital gender divide. Integrating digital applications with the legacy infrastructure is a particular sticking point. How many of the opportunities can reasonably be pursued and over what time? Digital Native. Discover how to exceed expectations, increase card use, boost brand awareness and stay top-of-wallet amid rapidly evolving expectations. To provide a structure for navigating this chaos, and to galvanize the shift to bolder thinking, we’ve identified six opportunities for banks to fuel future growth. Banks should consider this option if.... they possess a significant back-end capability that others don’t have and the ability to extend it into other environments securely. 1. Focus on a multi-channel approach with ongoing measurement of results. It’s difficult to scale digital initiatives across the institution. And legacy systems remain an issue. To build privileged relationships with customers, some financial supermarkets rely on recommendation engines, which use transaction, merchant, and customer data generated from the platform to provide personalized suggestions and offers. LinkedIn Boston Consulting Group recommends starting with a few key journeys that have the greatest potential to have the biggest impact. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. Strategy leveraging Asia’s megatrends has paid off with diversified growth and higher returns Digitalisation creates opportunity to pre-empt disruptors, disrupt incumbents and improve business profitability Our digital transformation is pervasive, encompassing … The new institution can use off-the-shelf products to launch fast. Intended for investors, the quarterly report quotes numerous statistics explaining “why digital matters” to the organization. CBA created an augmented-reality app that allows users to point their smartphone’s camera at a property and instantly see its current price and sales history. Digital as Business as Usual Plus. The consumer journey doesn’t get much less frictionless than Amazon’s one-click ordering — see it, like it, click it, buy it. Challenges become roadblocks. And Bank Bazaar in India, a pure-play financial supermarket with no proprietary offerings of its own, offers a full set of services from more than 50 institutions to more than 23 million customers. Meanwhile, BBVA U.S. CEO Javier Rodriguez Soler outlined how their focus was to “remain focused on executing our digital transformation strategy aimed at building our capabilities, expanding our product offerings, using technology to improve efficiency and … Unleash their potential. Download this insightful perspective on the changes in the financial services industry and what relevant actions are required to rise to these challenging times. Discover the features and benefits. When transactions are completed on a mobile app instead of in a branch, they can be dramatically cheaper. Those that do tend to make big strategic bets—on the order of 10% of their market capitalization. Here’s a short checklist for recruiting, onboarding and retaining a team of advisors. The vast majority point their finger at their current technology infrastructure. Arkadi Kuhlmann and Bruce Philp, The Orange Code: How ING Direct succeeded by being a rebel with a cause, Wiley, 2008. This article was originally published on March 27, 2018. Digital upends old models. Select topics and stay current with our latest insights. Antony Cahill, COO at NAB, describes it as “fundamentally reimagining and redefining all customer experiences.”. By attending only to the bank-related part of the overall journey, banks leave considerable value on the table. Harnessing our collective wisdom to make banking better. It is important to emphasize that digital transformation shouldn’t be seen as a strategy based on technology. Siam Commercial Bank used to rely only on the personal networks of its bankers to prospect for customers. Advanced analytics allow financial institutions to better anticipate loan defaults or to find consumers who, due to overzealous discounting, are underpaying and then reprice these products and services. Economies and new capabilities can have a rapid impact revenues up to 20 % reduce. ’ minds when faced with a smartphone, tablet, or partner with/acquire from?. A start-up, Kabbage had a distinctive new capability but lacked capital and customer relationships the personal networks of bankers! Reverse-Lookup to find non-customers who are a flight risk and then create individual action plans to keep consumers! 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