Business Banking’s Digital Transformation Pain Points

Digital bank transformation often comes with some fairly common pain points. For most banks, these can be distilled down to issues of speed, transparency and unification of systems.

Successfully addressing these issues starts at the strategy level. The industry’s rapid pace of change means banks should look further than just their usual 1 to 5-year outlooks. Institutions must focus on several key steps to craft the best strategy, approach and outcome. This ties back to fundamental questions: Where do we make our money? Where do we see our future growth? Where are we headed as an organization? It allows banks to gain a better understanding of their needs and ensure they are on the best path. And it often means taking a step back before proceeding.

Phase Zero
Creating the best plan requires perspective. This “Phase Zero” is critical for ensuring any project begins, and stays, on the right trajectory. In addition to curbing spending waste, it can greatly eliminate “shiny object syndrome” that plagues organizations during these projects. During this step, organizations should run front-end surveys to shed light on the possible outcomes, including some that may not have been considered prior to embarking on the digital journey.

A pitfall for many banks is taking a tech-first approach for these projects; the tech tends to become both the problem and solution for every issue. While technology is important, people are critical. People can be resistant to change, so approaching projects with a people-first viewpoint before beginning can preemptively turn a project’s nay-sayers into its biggest advocates. Conducting workshops or focus groups ahead of any project not only allows team members to become more comfortable with the changes, it can provide valuable input on their concerns.

Banking is a compliance-driven industry; many bankers struggle with the innovation mindset, even as regulators often push for new, more efficient processes. But the current interest environment has put fee income at a premium and competition for small business accounts continues to grow. The question for many banks is how to leverage what they already have to push further, while aiming for better efficiency at the same time.

Speed and Transparency
While the consumer bank side has made good strides when it comes to digital transformation, commercial and business banking have remained somewhat neglected. For these accounts, it often comes down to two main concerns: speed and transparency.

Successful digital transformation projects can involve a lot of trial and error. It is here that banks should learn a lesson from the tech world: be agile, fail fast, move on. Moving to a more agile mindset can result in outcomes perhaps once considered impossible. Banks must maintain compliance even as they push and innovate, and this requires speed.

Banks understand the need and benefits of making things easier for their customers, but the employee experience is equally as important. Tools and technology that allow employees to do their jobs faster and more efficiently means less time needed to help customers. It also means they can spend their time focused on other tasks, like new business.

Unification of Processes and Systems
Typically, there are multiple systems across a digital transformation project that must communicate. Conveying data between these systems can consume time and resources better spent on more strategic elements. For a commercial lender, answering calls on the status of a loan or opening a new account can require numerous queries and manual processes. While commercial loans may not have the compliance issues of consumer lending, the desired outcome is the same. It is about decision speed, convenience and transparency to the customer, and also for the team member working with the customer.

With so many disparate systems in a typical commercial lending process, this is often the biggest pain point for banks seeking a true 360° view of their business clients. Not only is it inefficient and makes tracking the process a challenge, it also makes it difficult to know where the data is located. Does that view include not only the loan process, but the treasury, deposits and personal accounts of the business owner? Is the bank even collecting this information? With so many different systems involved for a single commercial loan mapping, it is vital that banks bring that information into a transparent view that is easy to read and understand.

It is crucial that banks solve these specific points to grow their margin and fend off the competition. Both traditional and non-traditional competitors are growing, becoming a looming challenge on the commercial side. While client relationships are still very important, tech-enabled relationships are the future of the industry. Technology is the enabler, rather than a driver. Those banks that can thoughtfully, effectively innovate in these areas will be much better able to help their customers and thus, better positioned for success.