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Digital transformation can be a bumpy road for banks. In the past few years, I’ve seen hundreds of attempts at going digital. Many projects end in failure but even if not, most financial institutions have a hard time getting real results. So why do they fall short of their goals? Here are some of the key obstacles to overcome.
There are several factors at play but what really makes or breaks any digital transformation process is understanding customer needs. The problem is that many banks still believe that digital transformation is about systems and workflows rather than customers. But if they want to achieve the desired results, it’s time they changed this attitude.
As a matter of fact, digital transformation should be all about satisfying fast-changing customer requirements. In the brave new world of segments of one, banks simply can’t afford not to digitise their business model and offering. Why? Consider this: according to BCG, personalisation can boost product sales by 30-40% in some retail banking areas, cut customer churn by 10-30% and double or triple customer engagement scores.
But that’s not all. Here are the top five challenges financial institutions are grappling with:
I have no doubt that improving digital sales capabilities will be the single most important task for banks if they want to stay competitive in the coming years. Digital transformation should not only help them increase customer satisfaction and prepare for the new age of banking, but also to generate more profits. Today, the question is not whether the financial sector needs to go digital but who will sell more products and services digitally.
According to McKinsey, origination and sales generate 65% of global banking profits, totalling about $1,152 billion in 2016. These profit drivers are threatened by increased competition from digital-only challenger banks and tech giants like Amazon and Google. Banks need to act urgently to maintain profitability and get ahead in the digital sales game, or they risk becoming mere commodity providers with very thin margins in just a few years.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Harish Maiya CEO at Orin
03 February
Ritesh Jain Founder at Infynit / Former COO HSBC
Todd Clyde CEO at Token.io
31 January
Amey Prabhu Solution Architect & Head of Trade Finance Product at Veefin
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