Data-Driven Banking: Managing Digital Transformation

“The implications of digitalization are revealing the inadequacy of 20th-century business and operating models in an industry challenged with performance and regulatory issues.” – Gartner

Managing digital transformation in the banking industry is a complex and challenging task! Yet, it is crucial for banks to maintain their competitiveness in today’s rapidly evolving business environment. This article discusses a few steps to help banks approach and manage digital transformation effectively.

Utilize data-driven strategies

Banks can gain a comprehensive view of their customers by combining customer data with social media data. Leveraging data for digital transformation offers several benefits, including:

• Collecting unprecedented business intelligence.
• Reducing operating costs.
• Increasing margins and ROI.
• Protecting data.
• Ensuring compliance.

For instance, through cognitive analysis, banks can provide loan and mortgage approvals even before customers request them. Another example is identifying customers in need of a new car through web searches and social media data. Based on their credit history, pre-approved car loan details can be sent to them, even before they approach an auto dealer.

Develop a clear digital strategy

Banks must establish a clear digital strategy aligned with their overall business objectives. This strategy should identify critical areas where digital technology can enhance efficiency, improve customer experience, and drive growth. For instance, using the wealth of customer data available, digital banks can proactively offer home-improvement loans to customers when they need to replace their air-conditioning systems. This seamless service makes it easier for customers to continue using the bank’s services.

Invest in digital infrastructure

Banks need to invest in the right digital infrastructure, including hardware, software, and network infrastructure, to support their digital transformation. This may involve upgrading or implementing systems that enable better data management, automation, and analytics. In North America, there are 80 million potential millennial customers waiting for digital banking operations transformation. These customers expect 24/7 banking experiences through messaging and mobile apps from anywhere in the world. Meeting these expectations requires significant investment in real-time service delivery and automation, such as Machine Learning and Artificial Intelligence.

Embrace innovation

To stay ahead of the competition, banks must embrace innovation and new technologies like Artificial Intelligence, Blockchain, and Cloud Computing. They can draw inspiration from the auto industry of the 1980s, which greatly impacted the big three American auto companies. When these giants built automated manufacturing facilities, they often became outdated on the day they opened. On the other hand, the Japanese built plug-and-play platforms that fully integrated factories, allowing them to quickly replace individual components and keep up with evolving technologies and requirements. This constant evolution marked the beginning of automation and modernization.

Focus on customer experience

Banks need to prioritize delivering a seamless and personalized customer experience across all digital channels, including mobile apps, online banking, and social media. This may involve developing new digital products and services that cater to customers’ evolving needs. Chatbots, powered by AI, offer an option for improving customer experience in the banking sector. They process information from the bank’s knowledge base and CRM customer profiles to respond to queries and requests. If a request exceeds the chatbot’s capabilities, it can be escalated to a live representative of the bank for a solution. Chatbots are programmed to identify emotions and sentiments, ensuring personalized conversations.

Train and re-skill employees

Banks need to invest in training and re-skilling their employees to equip them with the necessary digital skills and knowledge to thrive in a rapidly changing digital environment. Ongoing training and development programs can keep employees updated on the latest digital technologies and trends. Overall, successfully managing digital transformation in the banking industry requires a combination of strategic planning, technology adoption, investment, innovation, and customer centric.