By Joman Kwong, Strategic Solutions Manager, Financial Services at Laserfiche
Today, digital transformation is imperative for every industry. After all, technologies like artificial intelligence promise unparalleled efficiency improvements, while even the most technophobic customers are now accepting and using a variety of online facilities, from movie streaming to grocery deliveries. Simply, digital is becoming the dominant method of producing, improving, and selling goods and services. And this is perhaps nowhere truer than within the banking sector.
Digital transformation is crucial for banking institutions to keep pace with customer expectations, while also addressing the macroeconomic disruptions that other financial institutions are currently facing. These including lower liquidity due to hiking interest rates and inflation rates, higher operational costs, and reduced consumer spending as businesses cut back on production, which lowers loan amounts.
While digital transformation is a top priority for many banks, only 30% that have implemented transformation initiatives report success. So, what is standing in the way and how can banks break through?
Customer-Centricity
Customer centricity continues to be the key driver of banks’ digital transformation strategies. Banks are using different approaches to be more customer-centric, such as:
- Improving customer onboarding processes
- Reducing friction in the customer journey (e.g., having AI chatbots for 24/7 customer service and automating the loan origination system to streamline lending processes)
- Providing a self-service portal for customers to access their financial documentation and make service requests anytime and anywhere
- Securing customer data and transactions
After deploying technologies to achieve these goals, however, banking institutions may uncover the difficulties of maintaining data integrity across applications. It’s imperative to have a secure, consolidated information backbone that enables the organisation to process data intelligently. This system can centralise data in a single source of truth, as well as integrate line-of-business applications to eliminate information silos, and leverage data to support automated workflows and drive informed decision-making.
Competing Priorities
As business leaders and teams embrace digital initiatives, banks may experience competing priorities and uncertainty about where to start. The solution here is not to try and solve everything at once — work with a business analysis team to map out operations with pain points and potential solutions and prioritise them.
Meanwhile, scarce internal resources or a lack of bandwidth, especially for IT professionals, will require the implementation of new software and the development of new solutions, which further increases the demand for IT resources. Banking institutions should always consider software manufacturers with low-code, no-code environments to develop and design apps while providing an intuitive interface for users. The ability to design and create processes should not be limited to IT professionals, either. With proper training, citizen developers and other non-IT employees should be able to create and deploy their own processes as well.
Data Security
Data security will also remain critical as more confidential customer information is released through mobile banking. Banks have also begun using AI to provide faster customer services and reduce repetitive administrative and back-office tasks, such as data capturing and migration. However, they need to be extremely thoughtful when incorporating AI into their tech stack to avoid breaching confidentiality or facing legal or reputational risks. Ultimately, tech like AI is the future of banking and commerce—but organisations must be well-versed in its use to make it a success.
With the implementation of new technologies, plus increasing scrutiny and emerging regulatory requirements to secure customer data, trading and financial services, information governance and records management become even more important. Organizations implementing records management and content services platforms should vet providers to make sure they provide the security tools needed to maintain strict access control for users in-office or working remotely, such as enterprise-level identity management; and built-in document lifecycle management functionality.
The Future of Banking Technology
With the ubiquity of smartphones, digital banking will no longer be an option but rather a must-have for the industry. Therefore, improving omnichannel operations will be one of the key priorities, along with streamlining banking processes like lending and buying homes. Take buying a home as an example: Customers are looking for a more comprehensive, connected, and seamless process. Different parties — such as brokers, insurance, mortgage providers — should be connected, allowing information to be passed along without customers having to repeat submissions.
Customers will also demand more personalised banking services, driven by millennials and Gen Z. This includes receiving quick and accurate financial suggestions from bank representatives and advisors. Banks will invest in technologies to better manage data intelligently, leveraging data across applications for more accurate, real-time customer analysis and informed alerts.
Change will continue to drive digital transformation in the banking industry, and digital initiatives will continue to evolve. The key to success lies in organizations’ business agility — how they react and adapt to today’s challenges and anticipate tomorrow’s opportunities.
