Digital Transformation Is Changing Core Banking

Digital transformation in banking is not a new trend. Still, it is one that many financial institutions have been slow to adopt despite more and more customers reporting a preference for online banking. Customers desire convenience and 24-hour digital access to banking products and services, which means making a move to an online platform is more important than ever.

Bank managers understand that digital transformation is vital for success and sustainability, yet many still rely on outdated concepts and technology. As a result, banks must adapt their operations to focus more on user experience to stay relevant and valuable.

Here is what you need to know about how digital transformations can benefit your bank and customers.

Online Banking Continues To Grow In Popularity

Putting your bank online has numerous benefits. It allows increased business efficiency, greater accuracy, lower costs, greater flexibility, and improved security. Banks also become more competitive when demonstrating a reliable online presence and IT infrastructure.

As traditional banking changed to accommodate ATM technology, banks also have to evolve further to take advantage of new technologies and customer habits. Online banking should offer a wide range of practical services such as checking balances, transferring funds between accounts and other financial institutions, check and debit card orders, automatic bill payment and management, and even mortgage and loan services.

Most individuals and small businesses find conducting business from their home computer or mobile device more convenient than always having to travel to a physical branch. The more online services, the better so long as the system is secure and reliable.

online banking

Mobile Applications Are a Must

It’s one thing for individuals and businesses to have the ability to bank online. It’s another to allow those same customers the ability to bank from practically any location at any time.

That’s where mobile applications come in.

Mobile devices such as smartphones and tablets are near-ubiquitous. Having an app that allows customers to check balances, transfer funds, and enable mobile check deposits is pretty much mandatory now. According to a study by Citi, just over 80 percent of Americans use a mobile banking app regularly, and 31 percent claim they use their banking app more than any other app on their smartphone.

The benefits for customers are evident. Mobile apps provide convenience, security, and easy access. That said, there are benefits for the bank in the form of lower expenses, greater customer satisfaction and loyalty, and the ability to collect and leverage customer analytics.

To help retain existing clients and attract new ones, mobile apps should offer a range of features and functionalities, such as options to order debit cards or to report one stolen quickly, push notifications on special offers, minimum balance warnings, suspicious activity notices, and a customer service portal. The more useful and practical an app, the greater the bank’s competitive advantage.

digital transformation banking

Privacy And Cybersecurity

Understandably, privacy and security are priority concerns. Banks and other financial institutions store a considerable amount of customer banking information, so having a robust security strategy is a must. While fraud and identity theft are not new crimes, how cybercriminals seek stolen data has become increasingly sophisticated.

A comprehensive digital transformation strategy focuses on preventing fraud and minimizing exposure to cyberattacks. For example, cybersecurity experts working on helping banks pivot to online banking can help strategize on ways to identify threats, prevent attacks, and lessen the impact of online crime.

banking security

Adapting To New Technologies

Digital transformation for banks means adapting to existing IT tools such as user analytics, remote access, and cloud computing and taking advantage of new technologies such as artificial intelligence, machine learning, blockchain, and Web 3.0.

Blockchain use, in particular, has been becoming more prominent in the banking industry. The database technology behind Bitcoin and other online currencies is being used to facilitate quick payments, fundraising, and trade finance. Banks that learn to adopt early get a good headstart over the competition.

Banks Need to Plan For Digital Transformation

As customer needs and expectations have changed considerably over the past few years, it’s more important than ever to make a move to digital to serve your customers better, attract new customers, and remain competitive.

That said, we understand that core system replacement is not easy, especially for local and community institutions.

So what are banks to do?

At L. Michael Wofford Consultants & Advisors, we can guide you through the process of digital transformation. Our consultants can help evaluate your current systems and your current and future needs, then offer practical plans to move your bank into the digital world. Contact us now to get started. 704-907-8501