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The Digital Banking Transformation: A How-To Guide (2/3)

Part II of our How-To series. Read Part I here

3. Personalize customer care

Historically, banks have done very little to tailor their products. Today, customers expect digital services that are not only faster, but also personalized. They want their desired channel, anytime, anywhere (recently coined “opti-channel” by Jim Marous of The Financial Brand).  

Good news for banks (for once): it’s actually easier to differentiate the experience for different segments digitally than physically (BGLN, 2014). For example, LaCaixa in Spain has adopted “ubiquity” as its digital banking strategy to differentiate its services and to enhance digital relationships with customers. The strategy is based on the following 3 pillars:

  • When (everywhere)
  • Where (always)
  • How (improving digital banking functions in a disruptive way)

Simple, a pure digital banking player, differentiates its offers by making its technology and service 100% human and personal. They put much more emphasis upon customer care rather than “selling products”, and the majority of new product ideas come from interactions with customers, creating a very positive feedback loop.

Other banks are identifying ways to play a larger role in customers’ transactions by providing contextual offers and advice. Still others deploy digital money management tools as a strategy to increase customer satisfaction, improve loyalty and retention.

4. Prioritize segemented mobile

Mobile has become the epicenter of digital banking. The Economist estimates that more than half of mobile devices sold today are smartphones, and more than 80% will be by 2020. They have become the fastest-selling gadgets in history, outselling PCs 4 to 1.

85% percent of the bank executives surveyed by AT Kearney & Efma said that mobile is the cornerstone of their digital strategy, as it becomes most customers’ first touch point. However, most banks have put their mobile banking strategies and customer journey through a “one-size-fits-all” approach focusing on features and offerings, ignoring the needs of individual user groups which vary across age and income. This tendency calls for a segmented approach, which entails developing needs-based features and offerings for a much more “adoptable” mobile offering.

5. Promote open innovation & experimentation

Cultural legacies and pressure from regulation have caused banks to become conservative and slow to innovate. According to one bank’s executive (BGLN, 2014): “This is a real threat… Right now there are some geniuses in Silicon Valley sitting around thinking about how to beat us – and we’re not thinking about how to beat them. The issues are not technical as much as they are organizational. We are talking about organizations that are incredibly resistant to change… Boards should be focusing on how to make the organization more responsive, nimble, and customer-driven. They should be encouraging management to test, innovate, partner, and explore.”

Open innovation ecosystems are the cradle of design and delivery in the digital era. Leading in digital requires, as one banking leader in Europe noted, “a highly efficient connection between new technology releases and partners.” Brazil’s largest bank, Bradesco Financiamentos, is addressing this issue by making its APIs available to FinTech start-ups and encouraging them to develop and experiment various solutions for the bank. BBVA is following suit by promoting similar partnerships and acquisitions. Others, such as UBS and La Caixa, are organizing innovation challenges and hackathons to find and partner with creative startups and entrepreneurs. 

Topics: Disrupting Banking, FinTech, Digital Transformation

Author: Artak Vardanyan, Product Marketing Manager on Apr 13, 2015

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