How Do you Become a Digital Bank?

Narendra Kumar

11 Dec, 2020

Digital Banking can be defined as “moving online of all the traditional banking activities and programs that were earlier only available to customers when they physically move into a Bank Branch”. It is also known as digitization. This includes activities like:

• Money Deposits, Withdrawals, and Transfers
• Checking/Saving Account Management
• Applying for Financial Products
• Loan Management
• Bill Pay
• Account Services

What is the Biggest Challenge Traditional Banks face in their move to Become a ‘Digital Bank’?

As there are some believers and some non-believers, some bankers believe the future is all digital and some believe it is just another channel added to the existing branch-based network. It is the Non-Believers who are the challenge as many of them will dismiss and hold back change.

For e.g.: All those who have built the bank do not want to destroy the bank so they will do all they can to defend it. If they built a branch-based bank building a digital bank that destroys the existing bank is unnerving. So they will block all efforts to digitize the relationship. That is the core challenge of how to convert the traditionalist decision-maker to really commit to digital.

Once you have that commitment it’s still not easy but no bank will succeed if the management team is not truly committed to the program.

What is the Biggest Change we are going to see in Banking in the next 5 years?

The biggest change is from a number of perspectives. From a regulatory point of view, there’s the dull stuff about banks withholding more capital, better management of risk, increasing competition & transparency and financial inclusion.

All banks are now focusing on delivering killer financial apps for corporate & consumers and soon they will pan out into a digital wallet fight. Banks will soon drop their focus on the device and will move on to focus on the customer experience. This is because the world is rapidly moving into digitizing everything. Eventually, everything everywhere will be communicating.

Banks will start moving from device to wallet to understand how to be a proactive, predictive enabler of Commerce at the point of relevance to the customer. The battle for banks is going to be a tough one as that’s a digital data war.

Key steps to Becoming a Digital Bank:

There are best practices to help you understand how your organization can make the transformation:

• Build a sense of urgency about the digital imperative—Make sure everyone understands that becoming a digital enterprise is now a “do or die.”
• Communicate a sound strategy across the company—create a business strategy that has executive and employee buy-in. Research shows that we are still working in silos and that most executives cannot explain their own strategy.
• Build the right team and define roles clearly—identify the new skills required and recruit the individuals who will champion the vision of the digital enterprise. Empower them to lead the organization forward.
• Engage your customers with a mobile and personalized customer journey—Select the customer-facing tasks that are the biggest opportunities to improve the customer journey, and use them to implement a digital service that becomes your competitive advantage. Utilize all of the channels optimally, but make switching channels invisible to the customer.
• Deliver the right work and training to the right person at exactly the right time—across all channels, get your customer’s request to exactly the right person at exactly the right time.
• Be agile by optimizing the back office to automate work—Automate as much of the work as possible so employees can focus on the exceptions.
• Continuously anticipate customers’ needs and use Omnichannel analytics to deliver feedback—Create a “learning machine” within the registered company by continuously getting feedback from your customers, analyzing the feedback, and delivering it to operations to drive improvements.
• Modernize your communications and CRM platform to create an adaptive architecture—Design and optimize customer journeys by implementing a six-part, unified architecture. This architecture will help you sense change and respond quicker than the competition.
• Govern for change—Implement executive governance and a center of excellence to radiate the business improvements while implementing scorecards for continuous improvement.
• Be resilient—Recognize that it’s not all going to be perfect from the word “go.” Continuously employ these best practices to identify areas for improvement, then act on those insights.