Modern consumers expect all services to be as easy and convenient as two-click purchasing on Amazon or hailing a ride with Uber. These and other tech-savvy companies will continue to shape digital services expectations across a multitude of industries for the foreseeable future—and banking is no exception. As demonstrated in a 2018 survey, roughly a third of digital banking users (32 percent) indicated a willingness to leave their current institution for a better digital experience. Nowhere might this be truer than with millennials—more than half of whom (51 percent) said they’d leave their bank for a better app elsewhere, according to a recent BAI Banking Outlook report.
Large national institutions have a head start in digital transformation. Jerry Silva, research director at IDC Financial Insights, stated in U.S. Banking Digital Transformation Spending Forecast, 2017-2020, "There are very few banks in the United States that aren't investing in transformational technologies, and fewer still that haven't at least developed a digital transformation strategy. And the largest institutions are allocating more than 40 percent of their IT budgets to digital transformation."
Though regional and community banks often lack the vast internal resources of their national counterparts, they still have several options to elevate the digital banking experience. One recently popular option is partnering with a fintech. However, not all digital banking providers are created equal and too many make claims that banks should fully vet by talking to another institution using those capabilities. Fintechs that can back their pitch are worth the due diligence to identify.
Selecting the appropriate partner marks the first major step; the conversion process is the next. Large digital conversions still represent a “new frontier” for most financial institutions, so tackling this process tends to be complex, time-consuming and stressful. While digital conversion may prove daunting, certain strategies can ease pain points and ensure the project’s success.
Get younger generations to the table
Major projects such as digital conversions require expertise and input from senior-level executives but banks are sometimes guilty of building project teams composed entirely of those executives. That leads to a lack of diverse vantage points and opinions. While more experienced generations provide valuable, irreplaceable expertise, younger generations (including the aforementioned millennials) deserve a voice at the decision-making table as well. Since many consumers are considerably younger than the typical bank executive, these younger generations must be given input, especially for projects where digital sits at the center.
Millennials and Gen Z are the products of today’s digital age, and have spent their formative years with a smartphone, tablet or laptop in hand. They understand the expectations of their peers and recognize a superior digital experience. Who better to contribute to and advise on your digital conversion? By teaming younger generations with their more experienced cohorts, banks can better understand and act on which digital offerings and functions to prioritize: whether voice authentication, personal financial management tools or P2P services.
Designate a digital delegate
Some banks treat digital as something better kept within the orbit of the CTO or CIO. This can be a costly mistake. CTOs and CIOs already wrestle with competing priorities such as compliance, IT and more. For digital to receive the advocacy it merits within the highest ranks of the institution, banks must designate a digital delegate—someone with a senior-level title and decision making power to execute needed changes.
A digital delegate must solely focus on transforming a bank’s overall digital strategy, which includes selecting the right tools and platforms. The digital delegate’s advantage lies in focusing on one overarching topic only. That greatly improves the odds of picking the best vendor partner for a smooth conversion.
Additionally, digital delegates serve a critical function of closely monitoring current and future changes in the digital landscape. That way, they can better anticipate where the industry will land in the next three to five years. This foresight and strategic planning is a must for banks eager to compete with national institutions.
Identify early adopters
Large technology companies such as Apple categorize their customers by purchasing behaviors, such as early adopters, fast followers or laggards. Banks should likewise consider categorization. By identifying strong early adopters to test new platforms—such as tech-savvy employees or even loyal customers—banks can digest and act on the feedback before offering updates to the entire customer base. This allows institutions to correct or modify any kinks or bugs and make the wider rollout more seamless.
Foster a one-team mentality
Digital conversions succeed when the entire team is on board and excited about the project from start to finish. From the executive level all the way to bank tellers, all-in support boosts the adoption level of digital initiatives. Strategies to foster this culture include frequent status updates, participation incentives and celebratory events at major milestones.
This one-team mentality should extend beyond the internal team to the bank’s digital banking partner. The right technology provider should align with the bank’s strategy and goals for growth. The most successful digital conversions result from a true bank-tech provider partnership, characterized by open, two-way communication that addresses challenges and opportunities.
No doubt that banks have a long list of priorities to juggle at any given time: compliance, security and IT among them. But they can no longer relegate digital experience to the backburner. Even with all the trials surrounding digital conversion, banks can ease pain points and achieve success when they give younger generations decision-making power, choose a digital delegate, leverage early adopters and promote a unified team mentality. For in the final analysis, digital power begins with driven partners and dedicated people.
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Carrie Nelson is senior vice president, support and services at D3 Banking Technology.