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How Banks and Credit Unions can increase ROI from Digital Transformation Initiatives

Jethro Limited > Blog > How Banks and Credit Unions can increase ROI from Digital Transformation Initiatives

To have an efficient business model, banks and credit unions are trying to adopt the right strategy between increasing physical branches, expanding into new markets and having a strong digital experience across products. More than $4.7 trillion has been invested in ongoing digital transformation initiatives worldwide yet, only 19% of customers reported significant improvements across 4 sectors including financial institutions like banks, credit unions, and others, the recent Kony Digital experience 2019 index survey revealed. There seems to be a disconnect between digital transformation initiatives and customer expectations.

The report further states that 68% of current digital initiatives are business process focused and only 28% of the initiatives focus on the customer while 4% are employee-focused. There is need for FIs to balance considerations. When institutions only focus on improving internal processes and not on customer preferences, they will experience low return on investment.

The 3 digital transformation approach being used in banking involves:

  • Transforming the Front-End/office: Carrying out renovations ​to improve customer perception while still running on legacy systems. Although the choice of using this approach relies on your digital strategy, it is a superficial approach since perception also depends on performance and the rate of service delivery relying on the legacy system.
  • Transforming Back-End/Office – Modernizing back-end banking systems without considering front-end /office renovation or changes to the organizational culture.
  • Holistic Transformation – End to end digital modernization and transforming organizational culture perception. It involves aligning technology, employee collaborations, and business processes with customer preferences.

A holistic transformational strategy ​would cause pleasant customer experiences that will provide opportunities for revenue generation.

3 Strategies for increasing ROI of digital transformation initiatives include:

Focus on customer needs and innovate on products:

Banks invest immensely on improving the online experience but the major transformation is at the core banking systems where manual processes can be automated and customer data can be centralized to authenticate customers across channels and products.

Digital transformation should focus on customer needs and their journeys by obtaining feedback and analysing their preferences. It involves looking at products from customer perspectives. Renovating legacy systems to have the capabilities to innovate on products that will dynamically meet customer needs and provide competitive value that might not be gotten elsewhere. Implementing new solutions that will enable swift service delivery. And the modernized system can provide useful tools for customers to better manage their finances. 

Organizational Culture Change:

People are the drivers of any initiative and digital transformation involves changing organizational culture;  inspiring employee mindset to be much more open to customer demands and developing solutions that are more customer-friendly. It also involves getting employees to change from the old way of working to new ways of engaging with the customer.
As vision drivers, executives or team leaders would need to engage with team members to make them understand that the transformation will be realized through them. The whole organization would need to align with the initiative for it to succeed. The alignment between cross-functional roles in the organization will ensure operational efficiency and enable better customer experience that will impact positively on the customer base and revenue generation. The dynamic vision to transform and remain competitive in the future must resound in the whole organization enabling everyone to align. In all, the customer must be the focus and the plan should aim to enable engagement, pleasant experience and loyalty. 

Partnering with FinTech Accelerators:

By removing the barriers to change and building an organisational culture that embraces innovation, banks can move away from a quick-fix mentality that doesn’t always address underlying issues.
There will always be disruption in the financial services domain so institutions would need to adapt by partnering with Fintech companies in order to modernize their platforms and accelerate their offerings. If banks do not adapt, there will be left behind and later pay heavily in order to catch up or risk losing their customers to other banks with more efficient offerings. Therefore, to innovate on products and accelerate service delivery to customers, financial institutions will need fintech partnership.

JETHRO is here to assist as your Fintech partner of choice in realizing your digital banking transformation efforts via system integration, optimization, implementation and support with innovative and competitive solution offerings. Contact us today!