Forward-thinking financial institutions have been focused on digital transformation to compete with megabanks and fintechs. They’re funding development to actively shaping user expectations for what a digital banking experience can offer. By 2028, the global digital banking market size is estimated to surpass $10.3 trillion.
Yet, many banks without deep pockets or partners and limited technology resources are relying on their core technology provider for a turnkey platform — a “bank-in-a-box” that includes bundled services like payments, loan origination and digital banking. The biggest threat remains for those institutions that decide to maintain the status quo with a less-than-impressive digital banking platform or ineffective home-brewed solution.
Consumers expect a seamless digital experience to help them manage their finances and achieve their financial goals. A recent study found that consumers’ trust in digital banking is shifting away from their preferred financial institution. If account holders aren’t convinced that their preferred bank provides the best digital security and privacy, reliability, feature breadth, and ease of use, they’re willing to leave. It’s clear that digital banking can make or break a bank’s future.
What is the ideal digital banking experience that account holders want? Banks should keep these best-in-class components in mind as they search for the right partners and technology for their digital banking transformation.
- Data-driven insights. Bank executives must find ways to execute on internal transaction data to deepen user relationships and build profitability and institutional loyalty.
- Seamless user experience. Now more than ever, it’s important that banks understand what attractive features will improve digital banking experiences for their users.
- Continuous software delivery. Best practices for continuous software delivery is to find a partner offering a single code source, rather than multiple.
- Investments in API and SDKs. Vendors that can seamlessly integrate application programming interfaces, or APIs, into digital banking help banks leverage the latest industry leading technology and maintain a competitive advantage.
- Cloud-forward thinking. Banks can leverage the cloud to enhance features, security and user experiences while improving uptime, performance and quality.
- Modern security strategies. When financial institutions and digital banking providers band together and treat cybersecurity as a shared responsibility, security issues can pose less of a threat.
Financial institutions may need to consider replacing legacy technologies and embracing artificial intelligence tools. This means taking advantage of transaction data flowing through the core to uncover important insights about account holders’ needs based on their behaviors and spending patterns, and using it to optimize the digital experience. This kind of thinking results in transforming digital banking — moving from a cost center into a revenue center, all rooted in data.
In the past, marketing campaigns focused on products that just needed to be sold. They were delivered from the top down, funneling to all users regardless of their personal needs. That strategy changed when big data, artificial intelligence and machine learning gave marketers the ability to target tailored messages to the ideal recipient. Aligning data insights and marketing automation means banks can deliver experiences that are compelling, timely and relevant to account holders.
Pairing insights and marketing automation with a digital banking platform allows banks to target their account holders with personalized engagements and cross-sell marketing offers that appear within the banking platform and other digital channels. Banks can generate a 70% return on initiatives targeting existing customers, versus 10% when targeting new customers, according to PwC. “In a time where every bank is focused on revenue growth in a constrained and competitive environment, making smart choices with limited resources can provide a fast track to higher-margin growth,” PwC states.
Banks can use data to drive revenue through the digital banking channel through a number of real-world, practical applications, including:
- Onboarding programs.
- Self-service account opening.
- Product cross-sell and upsell.
- Competitive takeaway.
- Communications and servicing opportunities.
- Product utilization.
- Transitioning retail accounts into business accounts.
Digital banking is mission critical to banks. Catalyzing this platform with data insights and marketing automation creates an engaging channel for deeper customer relations, ultimately transforming the digital banking investment into a profit center.