Digital transformation in banking means offering a suite of digital services and interfaces to clients, like one or more websites, mobile applications, and platforms to facilitate transactions. But it’s not limited to those functions—they’re just the start.
The market for digital banking platforms should reach about $12.5 billion by 2028, per a December 2023 report. Taking advantage of that upswing will require banks and financial institutions to catch up—and lead—in the digital space. To do so, they’ll need to understand the connections between customer expectations and digital banking, the core strategies leaders are already employing, and emerging trends.
Working with a digital banking consultant is one of the best ways to get started. The second best way to get started? Reviewing this guide, which has been updated as of February 2024.
Customer experience (CX) in banking is exactly what it sounds like: how customers experience your bank in all its forms. In digital environments, designing for and around CX is about understanding what customers go through when they interface with your app, website, or other digital location—and anticipating what they’d like their overall experience to be.
For example, banks can digitize banking customers' journeys by:
Many challenges in CX design come from unreliable data about your customers' preferences and issues. Integrating deeper, broader, and more frequent outreach through surveys and polls is one of the best ways to address it.
Facebook, Amazon, Apple, Netflix, and Google, known as “FAANG,” are a collective powerhouse that takes a customer-centric approach to a new level. While brands have come and gone, the Power 5 have prevailed, continually outpacing the growth of the rest of the economy.
One reason is that customers are at the core of everything they do. Their primary focus is finding innovative ways to improve CX and design by tirelessly working to understand the human condition.
Should the banking sector take a page out of FAANG’s book? The answer is a resounding yes. But where should banks start?
How you bring your digital goals to life starts with your digital transformation strategy and finding the right partners. Whether you decide to utilize a platform like Backbase, Mambu, or even a composable infrastructure architecture, it’s important to establish a foundation that gives you the most options for executing the vision you’ve created.
The right platform will allow you to set up and create your digital banking experience quickly and securely to mitigate risk. It will also enable you to evolve your program as consumer and stakeholder needs change.
Rewards and loyalty programs effectively foster customer loyalty—customers today expect to be rewarded for their continued patronage.
That said, you need to formulate rewards and loyalty programs to support your digital transformation in banking. You can begin by offering incentives to customers who engage in digital transactions. This can help you save operational costs, learn more about your customer, and better personalize their future interactions to their specific needs.
It’s important to understand that successful digital transformation and great loyalty programs come from the same place—a deep understanding of your customers and the ability to anticipate their behaviors. Pairing your loyalty efforts to greater overall digital transformation is a great way to ensure your customers’ experience is the centerpiece of your collective effort.
With so many users engaging in mobile banking, this channel should be a key consideration in your digital transformation strategy. If you don’t currently have a mobile app, you should plan on changing that as soon as possible.
Even if you currently have a mobile app, you should always track its performance and reassess its effectiveness. For example, ask yourself:If you suspect the answer to questions like these is yes (especially if you don’t have an app), it is time to find an objective partner to help put you on the path to better digital CX.
If you’re even a little familiar with Mobiquity, you know we are a digital consultancy that spends much more time talking about people than technology. As you start improving your digital tools (and those of your competitors), it’s important to fully understand how those tools impact those who use them.
Finding friction or gaps in digitizing banking experiences can be difficult. The Mobiquity Friction Report exists to help you by analyzing thousands of customer reviews in both the Android and iOS App Store. How will you refine your mobile app to create the best possible CX?
It is important to consider the payment platforms your customers use daily. There has been a surge in digital wallets, also known as “e-wallets,” and other payment platforms. These contactless payment methods have become increasingly popular and allow for ease when checking out online.
We’re seeing contactless payments on the upswing at restaurants to pay for groceries, medication, and telemedicine visits. Consider the integrations you can implement to enable easier digital payment for your consumers.
Success in online banking depends on users having convenient communication methods and getting technical support and customer service. This can take the form of conversational artificial intelligence (AI) technologies like chatbots and virtual assistants.
Arm your chatbot with answers to the most frequently asked questions and how-to guides to ease customers’ woes. Consider integrating voice recognition so users can get answers hands-free, preventing typos and enabling the use of technology in situations where multitasking is required, such as while navigating, cooking, or exercising.
In addition to removing friction from customer experience, voice technology and conversational AI is hugely beneficial from an operational standpoint. By reducing employees' time and energy on basic, frontline customer service, you free up resources to be applied strategically to grow the business and better serve customers in the long run.
Online portals are equal in importance to your mobile app and should work seamlessly to ensure that your digital offerings are leaving a positive impression on your customers. Remember that every interaction a customer has with you, regardless of the platform it takes place, can have a massive impact on your brand.
One bad digital experience can impact your customers’ overall experience and impression of your institution. Signing into your website to access financial information should be as seamless, secure, and efficient as using your mobile applications.
Digitizing banking is all about helping customers achieve their financial goals, and part of that necessitates harnessing the power of artificial intelligence (AI) and machine learning (ML).
AI and ML have empowered people to analyze data in real-time, spot trends and patterns, and act on recommendations. More than that, banks can use this technology to help clients decide when it is safe to spend and when they need to save, enabling them to make the most out of their money.
Making AI and ML your ally can also minimize the occurrence of fraud. You can, for instance, program online portal and mobile banking app algorithms to detect fraudulent activity and issue alerts for you and your customers’ protection. Is your bank using AI/ML to the best of its ability?
As noted above, staying ahead of the curve means more than establishing key fundamentals. It means looking forward and keeping pace with emerging trends.
To that effect, some of the most pressing digital banking trends for 2024 include:
It should be noted that these trends are not necessarily plug-and-play solutions for all banks. For example, there are some risks associated with GenAI that banks need to account for in their implementation.
As with all strategies noted above, working with a quality consulting partner can help you determine the best way to optimize your digital platforms for all parties.
As your bank transforms its offerings to cater to customer preferences, you shouldn’t do so at the expense of your traditional, in-person services. Ensuring that CX and EX are seamlessly integrated across all interfaces is increasingly important for banks and financial institutions that maintain physical branches.
That’s because physical branches are making a comeback.
After bottoming out in the pandemic, physical branch usage has increased to around its 2019 levels. And according to J.D. Power, physical branches are still important to large portions of the customer base. Namely, 38% of bank customers said physical branches were essential, and customers under 40 were more likely to increase their physical visits within the next year than those over 40.
Continuing to meet this market’s expectations in the future will mean optimizing the digital experience to work with—not against—the in-store one.
Cybersecurity is another critical consideration for banks and financial institutions looking to digitize rapidly. About 90% of bankers reported that cybersecurity is their top concern, rating it over workforce shortages and complications from outdated tech.
One reason is that banks’ digital interfaces harbor sensitive financial data that is highly regulated. Cybercriminals who get their hands on customers’ records can cause harm to said patrons, banks themselves, and many other connected parties.
To that end, digital banking strategies must account for cybersecurity and compliance.
On the one hand, industry-specific regulations like the Bank Secrecy Act (BSA) and the Gramm-Leach-Bliley Act (GLBA) require specific controls and visibility infrastructure to protect information and report on breaches.
On the other hand, many banks are also subject to broader security rules, like the EU’s General Data Protection Regulation (GDPR) and Payment Card Industry (PCI) Data Security Standards (DSS). Frameworks like these require rigorous controls and practices, like firewalls and regular risk screening, to prevent data compromise.
Complying with standards like these also requires targeted implementation of controls, ongoing maintenance and assessments, and periodic audits. Working with a compliance advisory partner to streamline your efforts is highly recommended.
To paraphrase an old saying—the best time to embrace digital transformation in banking was several years ago; the second best time is right now.
Regardless of where you are in the digital transformation journey, it’s time to give your customers the digital tools they need to complete frictionless digital banking transactions.
At Mobiquity, we take great pride in our ability to help you move your digitizing banking forward from any stage in the process. We work with financial service organizations of all sizes to create strategies and experiences that enable complete digital transformation or improve existing digital banking services.
Take a look at a sampling of our past work.
