Alkami Technology Plano Texas

3 Tips for a Successful Digital Transformation

Banks and credit unions are under increased pressure to meet constantly evolving consumer expectations, keep up with advances in new technology, and build resilience when facing economic uncertainty. These challenges combined with budget and resource constraints, force many financial institutions (FIs) to forgo or delay modernization even though they recognize the need for digital transformation. Around half of financial firms report they are still in the beginning or implementation stage of digital transformation projects. 

Prioritize what’s most impactful for account holders

Many FIs want consumers and businesses to be able to do any of their banking activities in every channel. While others understand that digital banking is changing the purpose and relevance of the in-branch channel. But what is the right approach for your organization? FIs need to reconsider the role of mobile, online, and branch channels to make sure their digital transformation strategy aligns with their account holders’ preferences. 

When a user engages with digital banking – either online or mobile – they typically are trying to complete a specific task like paying a bill, viewing their account balance, requesting money from a friend, or doing other transactional activities. But account holders want more with 54% of US online adults stating they should be able to accomplish any financial task through a mobile app. FIs must focus on improving the user experience and delivering the most in-demand mobile banking features to meet users where they are. 

The branch still plays an important role for FIs. Two-thirds of consumers and businesses reported they prefer to ask a real person for financial advice. The in-branch experience provides the human interaction consumers and businesses crave for certain types of exchanges. This requires FIs to reevaluate their staffing approach to ensure branch employees have both banking and people skills. FI teams must serve as educators and advisors for customers or members who are navigating tumultuous financial situations from a death in the family to a victim of fraud to uncertainty and confusion over mortgages. It’s important to remember though that users also want to have these interactions with a real person through mobile or online channels, with 86% of consumers expressing that they were comfortable using videoconferencing technology to interact with their FI. 

Overcome outdated legacy systems

Far too many FIs are still supporting processes that rely on people, paper, and severely outdated back office processes and legacy systems that hinder their digital transformation. Did you know that about 90% of financial services IT budgets go to maintenance with only 10% going toward digital transformation?

The first step in deploying intuitive solutions is creating an overall digital transformation vision that is realistically achievable. Ask questions like:

  • How will digital transformation help us win against megabank and fintech competitors? 
  • Are we looking to grow in new areas or retain existing customers or members?
  • Are we interested in exploring new revenue streams? 
  • How can we gain insights from our account holders’ data?
  • Are we leveraging data to inform our growth strategy?

 

With cross-functional alignment across the organization, FIs can develop a strategy that goes beyond maintenance and piecemeal components to invest in the digital transformation of the overall platform and align individual pieces into a seamless experience. 

One way to accomplish this is to leverage a cloud-based platform. As FIs evolve, this is increasingly important for the agility, resilience, and efficiency required for the digital-first world. IT infrastructure will need to undergo a shift of technology and mindset from complex customization required for legacy systems to the simple configuration provided by modern cloud-based platforms. Banks and credit unions that leverage microservices-based architectures with application programming interfaces (APIs) can offer the innovative digital banking features and capabilities that users now expect. These platforms streamline, standardize, and scale both up and down in response to rapidly changing market needs.

Leverage a digital banking platform with fintech integrations & data insights

With the rapid transformation in the financial services industry, FIs can no longer keep up with the pace of change and develop and manage all the best-in-class products, services, and personalized experiences account holders expect. To compete and survive, FIs must leverage a digital banking platform that offers a comprehensive partner ecosystem that’s poised to drive growth and generate value.

Fintechs have the freedom to innovate and the agility to build tailored solutions for niche segments. Without significant investment, fintechs offer FIs functionality that can be integrated into current processes or experiences for immediate improvements that do not require maintenance by the FI. Establishing partnerships with the right fintechs is the easiest, quickest, and most dependable way FIs can offer the products and services account holders want at the speed required to compete.

Beyond extending feature functionality through a partner ecosystem, FIs need a solution that derives insights. Presently, many FIs struggle to contextualize their data and make it a revenue driver for their institution. But what if it didn’t have to be that way? Banks and credit unions should prioritize investment in data analytics and engagement solutions that empower them to deliver personalized, targeted offers that increase product penetration, reach users across all channels, and increase revenue growth. 

Ready to kick start your digital transformation? Request a demo to learn how Alkami helps clients win the digital banking experience with the right technology and architecture for digital success.

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