Preventing the 3 ROI Killers in Digital Transformation From the Start
Brought to you by BrightFi
Digital transformation at community banks is often a complicated, time-consuming and costly process.
With the right approach, however, community banks can increase the value and return on investment of their digital transformation initiatives. The key to maximizing ROI is to take a systematic approach and avoid common pitfalls that could become barriers to success.
Any technology investment that a bank makes needs to meet – rather than hinder – its business goals. Adopting a customer-centric point of view and proceeding incrementally are essential to ensure a successful outcome. Digital transformation is ultimately about future-proofing the business, so it’s critical to choose technologies that can grow, scale and evolve.
The three most common ROI killers in digital transformation are:
- Doing too much, too quickly.
- Failing to connect with the customer.
- Not selecting a connected and experienced partner.
Doing Too Much Too Quickly
The number and variety of technology solutions for the banking industry to choose from is nothing short of mind-boggling. But successful digital transformation doesn’t happen overnight. Not all features are suitable for every bank’s needs or budget – or their customers.
Resist becoming blinded by the shiny objects some vendors will flash. Buying into all the bells and whistles isn’t always necessary at the outset of a transformation initiative. If the implementation fails, it will kill any ROI and team morale, and risks overloading staff and systems with immature solutions before the bank has confirmed they work.
A better strategy is implementing features and solutions incrementally using process improvement and customer satisfaction to quantify value. Taking smaller steps improves stakeholder buy-in and allows a bank to test-drive new initiatives with customers. Taking smaller steps towards digital transformation: implementing sidecar offerings and managed services instead of ripping out and replacing cores or launching products that the bank can’t fully support. New offerings must enable value without losing quality, security or customer satisfaction. Bank executives should establish clear and measurable key performance indicators to track progress, and only move on to the next step when the first is satisfied. There are few things worse than investing in technology that is too difficult to use or doesn’t achieve promised results.
Failing to Connect with the Customer
Misaligning technology choices with customer preference and digital banking needs sets up almost any initiative for failure before it’s out of the starting gate.
Banks typically cater to a broad demographic, making research and strategic planning critical at the procurement stage. Focusing implementations on tools favored by one specific group but not by others limits an organization’s capabilities and alienating others in the process. Customers groups have their own particular concerns and preferences, and it can be challenging to apply a single strategy that pleases everyone.
To avoid this pitfall, executives need to research, strategize, plan and focus to launch products that their customers truly want and need. Open dialogue with customers is the key to success, as priorities will differ vastly in every community. It’s not enough to emulate competitors, although that is a helpful benchmark. Ideally, banks should seek customer feedback through surveys, direct market research and speaking with them when they interact with the branch or brand to understand their priorities.
Not Selecting a Connected and Experienced Partner
Finding technology companies to support digital transformation isn’t difficult. It’s estimated that companies in the United States waste up to 40% of their technology spend on poorly-made decisions, like investing in technology based on a pitch from a sales professional that does not understand or have expertise in the institution’s particular needs.
Community banks have unique needs, concerns and customers, and should seek technology providers that speak their language, with solutions and insights to advance their goals. Select providers with experience in your niche – one that understands the particular challenges of community banking in the post-pandemic world. They should be experts that are well-versed in the banking industry, provide all technical documentation, satisfy regulatory and compliance need, and offer technology solutions that create excellent user experiences while being flexible, scalable and within budget.