Digital disruption is happening at all levels in the banking industry so much so that if banks don’t think in new and innovative ways, they will be reduced to a mere back-office utility. The impact of different business models on the current banking revenues could be huge. Incumbent banks are gradually becoming vulnerable due to innovative technology, new competition, and increased customer expectations. If there is digital disruption, it should be addressed and a digital transformation agenda has to be implemented so that banks stay relevant at all times and fulfill customer experiences in the digital spaces.
The fact is that the banking industry is going through significant disruption that is caused by consumer demand for the latest products and also competition from challenger banks and non-financial institutions. Therefore digital transformation initiatives have been taken by most banks in their pursuit for innovation, smaller new product development cycles, and lessened costs. Such digital transformation requires smart adoptions of agile practices.
Below are five main success factors:
Put Customers At The Core.
Nowadays customers are more demanding than ever. There is a demand of seamless experiences across every channel as well as products and services that are extremely personalized that flatter their particular lifestyles, preferences, and goals; strong security; business transparency; and, especially, competitive pricing.
The traditional inward focus has to be abandoned by product teams, instead, they should focus on needs and wants of the customer in order to attain customer-centricity as an enterprise goal. For example, an Asian bank that deals with some of the fastest-growing mobile markets of the world saw a prospect to create a bank that was totally and strictly digital. It planned a branchless, mobile-only bank that would carry out all the functions of a physical bank, and make all processes paperless and seamless. As a result, a bank will be formed that appeals to the digital generation as well as make banking easy for millions of people.
Consumers expect that their banks should double down on their value proposition within 18 months or less. It means a smooth innovation delivery pipeline based on agile practices is needed by banks which track market trends, tests new products, and then uses fast feedback mechanisms to iterate products for constant development. Customer churn will be decreased due to such an agile, on-demand innovation pipeline. Top banks have a structured new method of creating ideas and investing in winning ideas through in-house incubators in order to speed up time to market.
Modernize Legacy Systems To Keep Pace With Digital.
Cloud, big data, and analytics are some of the digital technologies that can improve efficiency within firms but they still depend on data that resides on-premise and information flow through legacy systems. Microservices, APIs, and DevOps processes should be used to modernize these core systems and it forms a critical aspect of digital transformation which helps in constant integration and delivery, leading to shorter release cycles.
Leverage The Potential Of Minimum Viable Products (Mvps).
Banks can avoid becoming obsolete if they launch much-needed MVPs across the digital channel and the use of the microservices and APIs can help banks in that. Automation is replacing routine tasks, therefore companies must handle concerns around “automation anxiety.” This can be done by organizing hackathons and “ideathons,” imparting entrepreneurial thinking in the staff, investing in cross-functional teams, and enabling employees to form a culture of learning, which is essential for banks to succeed.
The basis of effective digital transformation for banks is enterprise agility and the ability to innovate, adapt, and respond rapidly. It will help banks to meet the changing requirements of consumers, and keep away new digitally based competitors.
Top Banks Are Leading In Digital Transformation
Some banks are doing digital transformation better than others. A lot of investment is made in digital by some of the largest banks. The ability of some of the regional banks to move quicker is somewhat limited due to their huge reliance on technology vendors. The large players have invested in digital,” therefore market share is clearly moving toward them.
Legacy mainframes may have a few more years in banking, even though Accenture’s survey is of North American banks, the only banks mentioned in the report are DBS in Singapore, Barclays in the UK, ING in its European operations and HDFC in India.
The idea of substituting legacy back-office systems is almost not considered these days. There was a discussion a few years ago about ripping and replacing core banking transformations but it is no longer the case. Instead of rip and replace it is more a freeze and wrap mentality.
It is not only about offering online and mobile functionality, but digital transformation is more than that. Digital speed and convenience with human interactions have to be combined by traditional banking providers. The first technological challenge on the road to digital transformation is your digital platform. It will bring numerous benefits including the ability to partner with third parties and agility that might be missing from your current environment. Banking industry’s competitive landscape can completely change due to digital transformation.