If you’re still just considering full-scale digital transformation for your financial institution or approaching it as a series of one-off technology upgrades, it’s time to catch up.
Per Cornerstone Advisors’ 2022 What’s Going On in Banking study, three-quarters of banks and credit unions, to date, have launched a digital transformation initiative. Another 15% plan to develop a digital transformation strategy in 2022.
One of the primary benefits of digital transformation is the ability to attract and retain customers. The evolving fintech marketplace has raised the competitive stakes for banks. Digital transformation is your chance to embrace how a new generation of banking customers does business, and it will help you become more customer-centric in the long run. Organizational wins also include heightened productivity, increased transparency, lower operational costs, risk reduction in core activities and increased revenue.
Despite the many benefits, increased interconnectivity comes with heightened cybersecurity risks. Potential for data leakage and unauthorized access to data are part of the challenge of digital transformation.
For reasons that include miscalculations and a lack of organization buy-in, 70% of digital transformation projects fail to realize ROI.
While many organizations are investing millions into transformation initiatives, 70% of digital transformation projects fail to realize ROI. Reasons include miscalculation of up-front and maintenance costs for hardware and software, lack of employee training (thus low technology adoption) and lack of organization-wide buy-in. Whether you’re just starting the transformation journey or you’re in the thick of it, consider how to avoid these mistakes.
The banking industry was not built on a culture of collaboration and innovation but rather on routines and redundancy, which can naturally foster a “because we’ve always done it this way” mentality. But it is possible to make change and adaptability the new normal for employees. Here’s how:
Everybody fares better when there are shared expectations. There will be bumps in the road, but as Mary Poppins aptly stated, “well-begun is half-done.”
Before you begin, you need to understand the answers to three critical questions:
Start with your customer. Do you already offer a flexible framework consisting of APIs and mobile apps that can be tailored to customer needs? Do you know what those needs are and whether you are meeting them? Look for actionable insights to determine what your customers really want and need.
Learn directly from your customers through surveys or other research. Poll employees for customer feedback on what they hear in the branches. For example, 91% of financial institutions claim to offer a “100% digital loan application process.” However, many of those still require follow-up phone calls or face-to-face meetings, which many consumers find inconvenient and surprising, given the myriad digital options in the marketplace today.
Analyze your tech stack. Do you understand which areas need urgent attention, which are adequate for the short-term and which are future-ready? Determine which aspects of your tech stack will be retained and how they will integrate with your core platform moving forward.
80% of ABA survey respondents would consider moving to a cloud-based core.
To achieve digital transformation, core systems must be able to integrate with APIs. A 2020 survey by the American Bankers Association (ABA) revealed that 25% of banks will probably leave their core platform when their current contract expires. Eighty percent of ABA survey respondents said they’d consider moving to a cloud-based core. If you choose to migrate your network to the cloud, consider a unified networking and security solution since you will be extending your network traffic beyond the traditional corporate perimeter.
Be realistic about the competitive landscape and your best opportunity for success. Do you want to dominate as a mid-sized commercial bank? Will you carve out a niche for a specific demographic?
Make a list of must-haves vs. nice-to-haves in terms of technology solutions. Must-haves include meeting current customer expectations for a secure, real-time communication channel. For most banks, a Unified Communications as a Service platform (UCaaS) integrated with a Contact Center as a Service (CCaaS) serves this need.
Ensure connectivity, security and compliance with a software-defined approach. Software-defined wide-area networking (SD-WAN) with Secure Access Service Edge (SASE) enables financial institutions to leverage 5G LTE connections at a lower cost than other private lines—and helps ensure security and PCI DSS compliance at every endpoint.
Develop a cost-benefit analysis to ensure the technologies on your must-have list add value to business outcomes. If your cost-benefit analysis doesn’t cover everything on your wish list, make sure you know your priorities.
You’ve marked where you are now and you know where you’re going. Using your gap analysis and evaluation of what’s critical to address first, identify a list of actions to close the identified gaps.
Start with individual projects that are relatively low complexity, while serving your must-have needs. Quick wins involve less project governance and just a few key people. Low-complexity digitalization investments are likely to pay off quickly, have a positive impact on employee morale and foster a sense of momentum among the transformation team.
Now that you have a sense of your strategic priorities, seek out professional partners who can help you design and implement the right solutions for your needs. Be wary of ballooning complexity by bringing in several partners whose expertise and recommendations then need to be de-conflicted and aligned.
Benefits to reducing the number of vendors the transforming organization relies on include improved security and compliance with reduced complexity and cost.
There are many benefits to reducing the number of vendors you rely on, including improved security and compliance with reduced complexity and cost. Consider a solutions provider that can bring all your must-haves together under one vendor.
Mismanaged timelines during complex implementations create headaches for institutions and end-users alike. They can even derail your digital transformation project. Create a detailed roadmap with target milestones and assigned tasks. Set success metrics and measure them at each milestone.
Learn from these earlier phases what to do differently at later stages. Tweak and improve implementation as needed. Digital transformation success isn’t achieved by moving in a straight, predetermined line. Rather it comes from getting to the right solution for your organization in the end––while encountering as few detours and roadblocks as possible along the way.
Charting out a clear course for transformation will go a long way to understanding the time it takes to complete each phase and the stakeholder involvement needed for completion. Digital transformation starts and ends with a high-level overview of a future-state digital banking strategy that aligns with your vision. Keep that vision of the endgame front and center for your team throughout the digital transformation process.
Windstream Enterprise can give you the network tools, performance and security you need to start your banking transformation.
Enter your business location zip code below for business solutions in your area.
Find business zip code