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Alkami Research Measures Digital Maturity in Financial Institutions

Allison Cerra

CMO, Alkami

The banking sector is undergoing a transformative shift, marked by an ever-increasing push towards digitalization. This move isn’t just about adopting new technologies; it’s about fundamentally altering how banks and credit unions engage with their account holders, streamline operations, and stay competitive. 

Drawing insights from a comprehensive research study, Alkami gained a nuanced understanding of digital maturity levels within financial institutions revealing a landscape that is both diverse and dynamic.

The study, developed by Alkami in partnership with financial services influencer Jim Marous and Emerald Research Group, surveyed 215 decision makers across a diverse range of U.S. financial institutions and unveils a sector that’s varied in its digital evolution. From those just beginning to explore digital avenues to the tech-savvy trailblazers, each institution’s digital maturity is assessed, categorizing banks and credit unions into distinct segments based on their readiness and implementation of digital strategies. The study’s key highlights include: 

  • Digital maturity is linked to revenue growth, with the most advanced institutions reporting up to twice the annual revenue growth as the least advanced. These digitally mature institutions have fully deployed modern data technology, are more likely to source talent from outside the financial services sector, and prioritize investments to improve the account holder experience.
  • Organization size does not solely determine digital maturity. One-quarter of financial institutions excelling digitally have less than $500 million in assets. In contrast, more than one in seven of the least digitally mature institutions have more than $5 billion in assets. The differences between those outperforming or underperforming peers in their asset class center around cultural identity, attention to platform feedback, and data modernization progress, among others.

  • Even among the most digitally mature in the study, there is room to raise the bar. For instance, while digital account opening is offered by the majority of the most advanced institutions, only one quarter of them provide a 5-minute online account opening experience for new account holders and half are struggling to automate critical back-office processes.

Intriguingly, the findings underscore that size isn’t always indicative of digital sophistication. A quarter of the digitally excelling institutions have assets under $500 million, challenging the notion that only the largest players can lead in digital innovation.

To assess maturity within the industry, researchers utilized advanced analytics techniques to categorize respondents into four segments.

While all segments consider themselves customer-centric, the most digitally mature financial institutions are fully invested in technology, specifically focused on data modernization and recruiting high performing talent.  While not all banks and credit unions are at the same level of maturity, the four segments below are defined by specific characteristics to which an institution may fall.

Patiently exploring segment image. Woman looking at her digital banking application on her cell phone.
Patiently Exploring

Primarily smaller institutions which place emphasis on interaction rather than technology, heavily relying on third-party vendors. Their customer-first, relationship-driven mindset often sets them apart from the competition and they strongly value high-touch, in-person experiences. This segment gets the job done with limited resources and budget.

Innovation-Ready

Mostly mid-sized organizations are beginning to put significant investments into technology — prioritizing user experience over advanced functionality. Most of them strive to have a great platform user interface (UI) and usually deliver on it. Their next focus is typically the new or non-customer experience, adding more ways to shop for products and speeding up their account set-up experience.

Innovation-ready segment image. Man looking at his cell phone, opening a digital banking account.
Digital-Forward segment image. Business woman with laptop. Using data and targeted marketing campaigns.
Digital-Forward

Heavily invested in digital technology and have a better-than-average digital banking platform. Have understood the value of technology and have automated many back-end processes. Account set-up experience is among the best in the business for account holders and non account holders alike. Striving to be a truly data-driven organization leveraging modern technologies.

Data-First

Fully embraces a data-driven mindset. Laser-focused on results and using data for nearly every decision. Considers technology a major advantage and pushes vendors forward when not building in-house. This segment tends to be larger, full-service institutions, looking beyond banking to hire the best talent. Differentiates on access to data and ability to get the most out of it.

Data-First segment image. Business man with laptop. Using data to analyze digital banking business results.

Financial institutions have little alternative but to raise their competitive game, including suiting up their digital armor, to compete for today’s consumers in a competitively fragmented and prolific market.

Yet, the journey doesn’t stop at digital adoption. Even among the frontrunners, there’s a continuous quest for improvement, be it through enhancing online account opening processes or automating back-end operations.

This evolving digital landscape presents both challenges and opportunities. As financial institutions grapple with the complexities of digital transformation, the insights from Alkami’s study and the accompanying press release serve as a beacon, guiding them towards not just adapting but thriving in this new era.

By prioritizing customer experience, embracing data-driven technologies and automation, and fostering a culture of innovation with speed, banks and credit unions can not only meet but exceed account holder expectations, securing their place among the future digital leaders.

Alkami + Digital Banking Report: Digital Sales & Service Maturity Model
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