Consumer Needs are Prompting the Digital Transformation of Banks
In the past few years, it has been observed that banks have fallen behind in regards to their digital transformation. In 2017, the situation has improved considerably, but the fact remains that only a third of banks have completed their digital transformation (according to Avoka’s annual report State of Digital Sales in Banking).
Customer expectations: the digital experience plus human interaction
Today’s consumers are accustomed to high-quality digital experiences and expect the same when it comes to managing their money. Consulting firm Accenture has found evidence that banking customers are not afraid to change banks, especially when it means that their new bank will be more digitally advanced.
Based on a survey of 4,000 banking customers in Canada and the US, consumers expect a digital experience along with the assurance that their data will be safe. Paradoxically they also want an expansive digital offering as well as human interaction.
So the twofold mission of banks is clear: to provide a more digital customer experience while building relationships with their customers.
The status of digital transformation in the banking industry
Today, more than half of banking institutions are unable to provide most of their products online. The same goes for their ability to provide them through mobile technology: only 43% of banking products can be purchased by smartphone. Note that this figure is higher than it was in 2016 (31%).
Avoka also found that 70% to 90% of potential customers who try to open an account online give up in the end. So banks have a vested interest in improving the digital user experience in order to meet their customers’ expectations.
Why are banks procrastinating in going digital?
Banks have been reluctant to embrace digital transformation for the following reasons:
- Security: The banking industry needs greater protection of information and products than other industries. But other sectors that are equally vulnerable, like air transportation, have already taken the digital transformation plunge.
- Unsuitable products: It’s true that it’s harder to take out a loan or deposit money into a savings account online. At some point, you need to speak to a specialist because bank products are too complex and susceptible to risk. But digitalizing your offerings does not stop at making all your products available online. It means digitalizing the customer experience, making it easier for them to find information. This can begin online and be optimized to make customers want to continue their experience in a non-digital way.
- Too drastic a change: If banks think about digital transformation as having to change all their processes, platforms and offerings, they may resist doing so. They need to fully understand what digital transformation entails. It’s not just about creating a mobile app for their customers or making products available online. It also involves automating internal processes to manage customer records more efficiently.
- Cost: For many companies, digital transformation sounds like a considerable financial burden to. On the contrary, according to a McKinsey study, changing processes and services could reduce a bank’s costs by 20% to 25% because it actually helps them become more efficient!
There are many ways for banks to get their digital transformation underway. If they’ve taken little steps from the beginning, they’re likely ready to fulfil those added customer expectations by expanding to a digital experience and making it more personal. Don’t miss our upcoming article which includes tips to help banks embark on their digital transformation journey!