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Surviving the Digital Banking Revolution – 3 tips for Banks and Credit Unions


Lauren Wilson - May 30, 2019 - 0 comments

Surviving the Digital Banking Revolution – 3 tips for Banks and Credit Unions

The digital revolution has significantly altered far-reaching aspects of day to day life and society. Over the last two decades access to the internet and accessibility of smartphones has drastically changed the way we communicate and interact with customers across industries. Banks and credit unions have leveraged this improved technology to redesign and automate processes, improve efficiencies, and contain costs while offering new and improved customer experiences.

In their report, The US Banking Customer Experience Index (CX Index™), Forrester measured how well a brand’s customer experience strengthens the loyalty of its customers. The latest report demonstrates that for retail and direct banks, there is a correlation between revenue and a higher CX Index Score. Increasing an already excellent CX Index score by one point drives revenue potential four times as much as increasing a poor CX Index score by one point.

Despite this progress, the banking industry has to date avoided some of the upheaval that the digital revolution has brought to other industries. Now, however, the digital banking revolution is entering a transformative phase. Technology and customer demand is clearing the way for non-traditional competitors to enter and disrupt the most profitable lines of the banking business. Offerings including simple digital features are no longer enough. Banking experiences which are fully integrated with mobile, enabling customers to use their smartphones to do everything without ever setting foot in a physical branch are becoming the norm, and innovation continues to push the digital line more.

During this revolution, existing banking players have some advantages. Established brands, clients, customer data, and market experience offer a head start to adapt and innovate services to meet the demands of customers, both today and into the future.

Here are three tips for financial institutions to survive the digital banking revolution and transformation:

Focus on where the real value is:

Establishing any strategy is no different than launching any new business and requires complete clarity on what the value drivers are. Specific to the digital banking revolution, McKinsey has observed a “templation to copy or replicate existing models”. It is important to review and consider customer segment data to inform the right strategy, rather than focus only on what the competition is doing. Another common mistake, they note, is to assume that one solution can work for an entire region or population. While demand is growing worldwide, some markets are less open to digital-only products and may need a different entry point, change management strategy, and marketing plan.

Constantly test to refine the customer experience:

Rolling out a new product or service still requires extensive planning and customer research; however, in the world of digital banking, access to customer behaviour data provides real-time feedback on what is working and what needs to be improved.

Rather than long planning cycles for large customer experience improvement releases, financial institutions need to adapt and adjust their processes to operate and implement smaller, ongoing improvements and then quickly learn and adapt from their customers’ behaviour. While many financial institutions have been migrating towards a more ‘agile’ technology environment, competing in the digital revolution requires this as a core strength. For many banks and credit unions, excelling a ‘launch, learn, adapt’ environment requires onboarding new skill sets and expertise.

Create an ecosystem of partnerships:

Success in the digital banking revolution means acquiring the critical mass of customers, quickly. Existing banks and credit unions have an advantage in attracting targeted current clientele to migrate; however, to win in the acquisition arena requires more.

Creating a digital ecosystem of partnerships will help your financial institution have reach and placement that will be enticing to your digital banking focused target market. The type of partnerships can vary. One partnership option could be e-commerce retailers for payments, lending or affiliate marketing. Or strategic fintech partnerships which can bring your clientele innovative and valuable new services,  while also performing as an acquisition tool to your core services.

The digital banking revolution will continue to transform how financial institutions interact with and serve their customers. While it is true that research continues to show that Millennials and younger generations prefer to bank online, the accessibility and flexibility of digital banking offers solutions for challenges across generations. Digital banking can remove barriers such as transportation and mobility, while increasing transparency, simplicity and control for its users which is valuable across a growing number of populations. What is your digital banking strategy? We’d love to hear. Share with us at partnerships@myvoleo.com.


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