Lessons We’ve Learned through New Challenges... And how financial institutions can stop making the same mistakes.
It seems like everywhere we look, there’s a new “digital transformation” process getting started. From the way we interact with healthcare providers, to the way we travel and even how we handle our daily tasks, one thing is certain: Digitalization is here
In Banking, however, this process has been nothing short of complex and full of intricacies, yet the transformation hasn’t been without complications — especially after the COVID-19 pandemic.
As the FinTech industry continues to evolve, here are the must-know truths about banking and digital transformation, and the mistakes you should stay away from at all costs.
Old Problems Meet COVID-19
When COVID-19 shook our worlds in early 2020, the volatility of the market was only enhanced. This unpredictable scenario also brought hardship on consumers, who turned to financial institutions for much-needed aid. This surge in demand highlighted some
of the outdated operations in banking and generated great frustration among the public.
Here are some of the most affected banking areas:
A lack of digital capacity became a real hindrance to customer success when banks simply didn't have the bandwidth to serve the large number of customers needing immediate support. This, accompanied by fewer available workers and the sudden closing of financial
facilities, made it difficult for organizations to maintain a positive experience for customers who needed it most.
However, a recent Hiver study showed that 80% of consumers expect better customer service during COVID-19. Amongst
the biggest areas of focus are higher responsiveness and more empathy.
- Paycheck Protection Program (PPP) Loans
Many affected businesses, like restaurants and those in the entertainment industry, were not able to access the financing they needed because their banking institutions relied on manpower to get the processing done. This didn’t only affect consumers’ livelihoods,
but the relationships between banks and consumers were severely damaged.
In response to COVID, many financial institutions tried to solve their problems by hiring a large number of employees to process applications. This attempt, however, didn’t solve the problem as new employees with little to no training weren’t able to work
as quickly, and errors only became more frequent. Only receiving the proper documentation took days.
As people lost their jobs, businesses shut down and consumers’ financial situations became uncertain, banks started seeing a massive influx of requests. Because many banks didn’t have procedures in place, customer service phone lines collapsed and callers
had to wait hours to submit a request from their bank. This delayed loan applications and made trusted customers incredibly frustrated as trust was damaged, ultimately hurting the bank’s brand.
With a lack of digital processes, manual tasks were only increasing and customers lost their patience, taking to social media to express their dissatisfaction.
- Digital Transformation Delays
Amongst its many damages, the COVID pandemic highlighted the digital shortcomings of the banking industry, where modern operations could have prevented many of the above-mentioned issues.
Why Digital Transformation Projects in Banking Fail
Even though digital transformation is likely on every banking institution’s radar, these efforts often fail for similar reasons: Risk aversion, cultural adaptation, and lack of research. Here’s why replacing legacy systems often fails.
The “this is how we’ve always done it” mentality is one of the main reasons why financial institutions haven’t adopted modern ways of banking, and still rely on inefficient, manual processes that don’t contribute to growth. This reliance on legacy systems prevents
banks from providing the best possible services for their clients as digitalization increases transparency, bandwidth, and process accuracy. No matter where they are in their customer journey, consumers need to know they are banking with a company they can
Consumers are becoming more tech-savvy and increasingly searching for ways to conduct their business through digital banking. A bank’s company culture needs to reflect the importance of technological advances that better serve their customers. Change comes
from within, and when banks refuse to shift their digital efforts, their clients start looking for an organization that will.
Lack of Research
When it comes to an organization’s marketing strategies, the first order of business is always to define the audience, do a competitive analysis, and conduct extensive market research before launching a campaign. So why aren’t banks doing the same for digital
As customer-facing entities, banks must understand what their customers want and how they want to access it. Whether it’s applications for checking balances, one-click ways to send payments and transfers, or integrations with social media platforms, understanding
the audience is key.
2021 Is The Year of Digital Transformation in Banking
According to a recent Value Penguin report, major uses of online banking include checking an account balance or recent transactions “Mobile banking provides convenient features that
are increasingly sophisticated and capable of replacing brick-and-mortar service. As consumers become more familiar and confident in mobile technology, the use of apps and web tools for banking will increase. In addition, surveys suggest that the growing number
of smartphone users increasingly rely on their smartphones to help make financial decisions,” they explained.
But beyond offering transfers, payments, and loan applications through digital services, adopting fully streamlined, end-to-end automated processes is the only way banks will be able to grow and thrive in 2021 and for years to come. Without integrating and
streamlining customer-facing and back office processes end-to end, customers will never have the experience and simplicity they want. As far as banks have processes in place that complicates the access to products and services, customers will continue to look
Some years ago, banking users had no other choice but to stick to their brick and mortar bank; but today that’s not the scenario anymore. Therefore waiting is not an option and the future depends on this.
From digital customer-facing applications to back-office operations that take advantage of technology, digitalization is here to stay, and banks can no longer rely on outdated processes to serve their customers.
By embracing the digital transformation, banks can empower employees, improve company culture, increase transparency and improve their bottom line by better serving customers. So why wait?