The Top 5 'Human' Trends in Digital Banking for 2018

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2018 has arrived, and with it a renewed discussion on the future of digital banking.

While most industry buzz still revolves around new technology — from blockchain, to AI and the IoT — banks and credit unions are realizing something important:

Change management and customer-centric strategies are as crucial to the success of digital transformation as new technology.

Put simply: people are just as important as tech.

And financial institutions that fail to realize this risk losing market share to upstart fintechs, large tech companies, and other financial institutions.

Here are some of the top “human” areas of digital transformation that’ll affect digital banking in 2018 — and some ramblings about why you should care.

1. Personalization, Data & Internal Silos

Customers get personalized experiences in almost every other aspects of their lives (thanks Amazon). And they have increasingly high expectations for their financial institutions.

Consumers are no longer satisfied with you telling them what has already occurred. They want their bank or credit union to know them, look out for them and reward them for events that you believe will occur in the future.
— The Financial Brand

But to send personalized offers, you need data. Not just any data; the right data, analyzed in a way you can actually use.

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And bad news — that data is currently split up in a bunch of organizational silos (you know, the people you see on email chains but never talk to — like Dave from phone channels.)

Breaking down those silos is crucial. And not just from a tech standpoint.

Yes, sharing data is important (I dare say, necessary). But so is collaboration between team members.

The people who look at the data and say “here’s what we should do” can’t exist in silos. They need to work together, improving the entire customer experience — not just a single touchpoint.

2. Changing Role for Branches & Front-Line Staff

Digital banking has really thrown front-line staff through a loop.

Winning financial services organizations will provide all customer contact personnel with the digital tools required to access answers quicker, and will invest higher trained personnel who are better equipped to use these tools and present high value responses to inquiries.
— The Financial Brand

Customers can now complete day-to-day banking tasks without visiting a branch or talking to anyone. It’s just a couple taps on their phones.

It’s great for socially awkward hermits like me. Less so for your front-line employees. Because when customers do reach out it’s increasingly for complicated stuff.

Your front-line staff have to be ready for this shift. They need to be able to answer questions and recommend digital options. They need to know what they’re talking about and provide valuable advice to consumers.

And that requires a serious investment in both tools and training on your part.

3. FinTech Partnerships

To keep up with the changing demands of the financial marketplace, banks will need to consider partnerships with fintechs.

I know, I know. You’ve been reading about how fintechs are stealing your market share for years, and now you are supposed to partner with them?

The short answer is… yes. Sometimes the best way to beat ‘em, is to join ‘em. (that’s the saying right?)

Fintech collaboration is not about grabbing for the ‘next shiny object’ — it’s about intuitive product design, ease of use, and 24/7 accessibility. Embracing fintech is as much about different ways of working and problem-solving as it is about deploying new technology.
— The Financial Brand

Partnering with fintechs gives banks the ability to bypass rigid organizational structures that impede innovation.  It lets you be more innovative, and get new products to market faster. And it helps improve your customer experience, which let’s face it, is pretty important.

But as the smart folks at Financial Brand caution, these partnerships need to be strategic, not based on “cool” new tech.

4. Digitizing the Back Office

While banks have been focusing on cool new front-end tech, back-end processes haven’t changed that much.

And that’s starting to cause some issues.

Most organizations are still using technologies and systems from fifty years ago. In most cases, the only difference is that we are accessing these systems through digital devices. This is not a road to success.
— The Financial Brand

In fact, 87% of organizations don’t believe their current core systems can keep pace with customer facing initiatives.

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You can’t focus solely on customer-facing experiences. Back-office processes also need to be examined and optimized.

Admittedly this is a predominately “tech” issue. However, to make successful changes to your back-office you’ll also need a solid change management strategy.

Getting back-office employees on-board with changes is critical.  Staff who disagree with (or worse, work against) new processes can derail your attempts at transformation.

5. Updating Marketing Strategies

As the definition of convenience in banking changes, the importance of online channels has increased.  But it’s not enough to just “have” great tech. You also need to promote it — and get customers to use it.

To be considered, a bank or credit union must not only have a strong digital banking offering, but promote this offering as well.
— The Financial Brand

Many banks run awareness campaigns that promote their digital offering. The belief being ‘if you tell customers a product is convenient, they’ll adopt it.’

But awareness isn’t enough to drive adoption. Customers need to have a reason to change, and feel confident using new digital products.

And that requires a shift away from passive advertising like TV ads to marketing that’s interactive, engaging, and actively encourages consumers to try digital products.

 

The Bottom Line

As we move into 2018, financials institutions will need to make strategic investments in both back-end systems and consumer-facing initiatives.

However, there’s a risk that these transformation efforts will focus solely on technology.  The human aspect of these changes is equally as important; frontline staff need to be trained for their new role, organizational silos need to be broken down, and leadership needs to adjust their strategies for the new customer shopping journey.

Without equal attention to both tech and people, transformation efforts in 2018 will be doomed to fail before they even begin.