What’s Next For Digital Transformation?
Technology has been a considerable force in reshaping every facet of the financial services industry. Still, financial services—particularly community banks—have a long way to go. Despite how ubiquitous technology appears in everyday life, barely one-third of community banks have considered their digital transformation strategy seriously.
They do so at their peril. Incoming customers will more than likely be members of the Millennial and Gen-Z populations. These groups expect more digital options in their banking and to cling to more traditional banking practices is a fast track to obsolescence. In addition, as they become more comfortable with technology, older generations have come to rely on digital options as well.
During the COVID-19 pandemic, it was sink or swim for many individuals and businesses. Closed doors, social distancing, and remote work all contributed to the need for banks across all communities to catch up with consumer needs and embrace digital transformation.
What Is Digital Transformation?
Digital transformation in banking is a technologically-enabled cultural, organizational, and operational shift. In its most basic form, digital transformation is the internet-based transition to digital client services. In many ways, it enhances various areas such as process automation, customer experience, data integration, organizational flexibility, and sales.
Ultimately, a successful digital transformation strategy can result in:
- Lower operational costs
- Risk reduction in core activities
- Reduction of paperwork
- Enhanced productivity
- More efficient handling of clients, transactions, and settlements.
- Improved teamwork
- Increased revenue
A prime example of one facet of digital transformation is the presence of a mobile application with which bank clients can pay bills, transfer funds online, apply for loans, and manage payroll accounts—all at the touch of a button.
Something as simple as a mobile app can allow a bank to retain customers, reduce operational costs, attract new customers, and facilitate onboarding. All of this can contribute to increased revenue.
Launching a Digital Transformation Strategy
Coming up with a clearly articulated strategy is crucial to digital transformation success.
First, businesses must assess and manage the risks associated with digital transformation. Often, this revolves around security issues—possible data leakage, unauthorized access to data, and identity theft. This means revising current business processes, looking for security gaps, and upgrading one’s IT infrastructure.
Building a successful digital transformation strategy also includes developing and improving customer experience and, for employees, nurturing a culture of innovation. And because technology is going to change how many banking processes work, updated employee training would also be a priority.
The essence of digital transformation includes flexible services, technological agility, new business models, and faster time-to-market.
The State of Fintech
Successful digital transformation relies on keeping current with what’s happening in fintech. In addition, as systems move to a more customer-centric, online platform, it’s essential to know what services have been recently developed.
For instance, Fiserv, a leading global provider of payments and financial services, has recently acquired Finxact, a leading developer of cloud-based banking solutions. SilverLake System is working on its next-generation core system, which will be cloud-based, real-time, and integrated via application programming interfaces. And FIS’s new Modern Banking Platform aims to serve the community banking market in addition to large regional banks with innovative plug-and-play components that are fast, scalable, and extensible.
To help guide you through all the latest developments in the fintech world, establish a successful digital transformation strategy, and usher your financial institution into the 21st center, the team at L. Michael Wofford Consultants & Advisors can help.
We can help evaluate your current systems and your current and future needs, then offer practical plans on how to move your bank into the digital world.
Call today for more information and to set up an initial consultation. 704-907-8501