When was the last time you actually walked to your bank, showed the banker your identification card, and requested a withdrawal? Or, cashed a paycheck with an actual banker rather than your cell phone? How about paying your friend back exactly $30 in cash for gas money instead of sending them a quick payment on Venmo or Cashapp?
The digital transformation in the last 10 years has impacted the banking industry in a big way. Although most of us Gen-Zs and Millennials don’t realize it, few would argue against how powerful the impact technology has had on the global economy. Even though some industries have been on the leading edge of this shift, banks and financial institutions are only just beginning their transformation into the digital ecosystem.
In fact, traditional physical banks are still the predominant financial institutions with which people choose to keep their money. However, there is a decline in the necessity of these traditional banks. According to the National Community Reinvestment Coalition (NCRC), 9% of all bank branch locations closed between 2017 and 2021, a loss amounting to about 7,500 branches. Today, an estimated 203 million individuals utilize digital solutions for banking; this number is projected to grow to 216.8 million by 2025.
With digital finance options ranging from online and mobile banking to neo banking and fintech, there are plenty of digital technologies to manage your money efficiently, and from anywhere.
While this is true, digital transformation in banking brings with it changes in consumer demands, advances in existing banking technologies and processes, consumer experience, and the need for a plan. How can we make sure to safeguard our finances in the digital age, and what does history teach us about how to prepare for the future? Read on to learn more about how digital banking can affect society, the global economy, and your wallet.
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Contents
What Is Digital Transformation In Banking
Digital transformation in the banking sector refers to the process of incorporating modern technology into the banking system to enhance the customer experience through digital optimization. When implemented correctly, this digital transformation can help traditional banks compete in the competitive online banking service industry.
Similar to how the rise of the internet gave birth to companies offering inbound marketing services, the all-encompassing digitalization also resulted in the creation of new financial institutions and affected traditional banks.
The digital transformation in banking involves a significant change in the way banks operate, including the adoption of online and digital services. This shift requires banks to undergo numerous operational and cultural changes to support the transformation. In addition, banks must choose the technologies they utilize carefully to succeed in the digital transformation and apply impeccable timing. In short – the bank must have a digital strategy planned from the beginning. These factors are critical in determining whether a bank will thrive with online services, or be on the brink of survival.
A common mistake made by many banks is taking on separate digital initiatives without proper support or coordination. This approach often leads to struggles in competing with digital-native solutions. Instead, the digital transformation in the banking institution must entail a top-down approach, integrating digital channels, customer experience platforms, key infrastructure, and top-notch customer service.
The Focal Areas Of Digital Transformation
The Customer Journey
At the beginning of their digital transformation journey, most banks create a website and mobile apps where customers can make monetary transfers and withdrawals, as well as manage their savings. Incorporating these online services forms a considerable step in the digital transformation of banking by accelerating the customer journey.
As the famous saying goes, “the customer is always right,” and this holds true in the banking industry as well. The main aim of digital transformation in banking is to create a seamless digital customer journey by integrating all banking services into a single online platform, allowing customers to be served through a unified tool.
Within the traditional banking customer journey, the customer must go through several departments, wait in lines, and carry physical cards and tools of identification to produce a simple monetary transaction. With online banking, whether via a website or app, customers can access all these services through their phones without leaving their homes, ultimately improving customer satisfaction.
Additionally, digital banking provides consumer insights which are also helpful to banks. This online data is analyzed to predict consumer behavior and allows banks to provide highly personalized offers and solutions through a representative or an automated offer or answer inside an app or online portal.
For example, a customer may begin their journey by clicking on an online advertisement for the bank’s app, then proceed to download the app and become onboarded with that bank. Today, banks can target customers who are specifically interested in online banking or have been recently searching for a “savings account” provider. In the long run, this process will save the customer money and meet customer demand, saving them time and money.
Big Data and Digital Banking
Following the creation of a seamless customer journey is the focus of “big data” in digital transformation. Through digital transformation, banks have more access to data than ever before. The more digital services they offer, the more data they can gain. This data allows banks to take leaps in updating their operations and business strategy and understand their customers better than ever before.
In banking, big data and data mining provides critical statistics for composing targeted marketing campaigns, creating promotions to keep customers from leaving their service, and establishing personalized solutions for customers’ needs. This helps retain customer engagement while fulfilling services to meet consumer expectations. Artificial intelligence (AI) built on big data also allows banks to incorporate helpful 24/7 chat boxes into their apps and websites, further meeting customer demand.
Adaptable for Change
True digital transformation in banking requires changing the organization from the inside out. While critical data can enhance the customer journey and provide the data necessary for more robust campaigns, a bank will only survive its digital transformation if it is adaptable to change. And, as technology is constantly evolving rapidly, it can be difficult for a bank’s workers to keep up.
Since banks hold very sensitive user information, new legislation, security measures, and strict frameworks must be implemented to adhere to the law and protect customer privacy. These security measures include fraud protection, data privacy laws, and cybersecurity threats.
The most challenging hurdle banks face when implementing these laws is changing their internal infrastructure from the outdated legacy online systems they have used for decades. Bankers have relied upon these systems for years, but they are incompatible with new technologies, require far more processing, and produce higher risk, posing major challenges to the digital transformation of banks. Although it will take time for employees to learn and adapt to the latest technology and consumers, these legacy systems will suspend banks from adapting to digital transformation.
Equally concerning, apps like Venmo, CashApp, and PayPal are outpacing the digital transformation most banks are undertaking, so these frameworks, systems, and technological advances must be implemented promptly.
Therefore, digital transformation focuses on a wide range of external services like online portals and chatbots and how the organization reacts to change. Banks must adapt quickly to policies to meet changing consumer demands while evolving to new technologies and responding to market changes.
In addition, business continuity is an important part of the plan, as it ensures that, with the help of BCMS, financial operations continue to operate smoothly even during unforeseen events like natural disasters or pandemics. This could involve adopting cloud technology for storing crucial data securely and remotely, or implementing digital banking solutions that give customers uninterrupted access to their accounts and banking services.
Due to these strict and competitive adaptation guidelines, many banks fail to succeed in digital transformation. This is why having a successful digital strategy planned for transformation is vital to a profitable and efficient digital transformation.
Overviewing what we have discussed, the key components banks should take into account in their digital strategies are:
- The support of the customer journey through online services and enhanced solutions
- The collection and analysis of big data to customize the customer journey further, create targeted campaigns, and adapt to AI
- The replacement of traditional legislature and framework with new documents to support consumer privacy
- The implementation of a digital culture within the banking institution before the implementation of digital services
If all these key components are applied in the institution both quickly and consistently, the bank can thrive in its digital transformation.
Trends To Look Out For In 2023
As the digital banking transformation continues to evolve with today’s digital capabilities, we will see new technological features in banks in the new year.
Here are some of the new tech features to look out for in the financial sector in 2023:
- Banks will embrace and deploy artificial intelligence (AI) and machine learning for banking solutions.
- Banks will deepen customer relationships via chatbots.
- Banks will enhance cybersecurity measures and reduce fraud.
- More consumers will feel comfortable banking on their own as the banking industry is becoming increasingly customer-centric.
- More consumers will prefer digital channels over contact methods.
- Banks will employ open banking as it allows them to offer more innovative products and services to their customers.
- Banking apps will evolve into smart digital assistants.
- Blockchain technology will be adopted in many areas of internal processes within financial services beyond just simple transactions and money transfers.
- No-code and low-code development platforms will be adopted within banks to allow for faster time to market.
- There will be a shift in using banking apps as monetary self-service tools to tools that foster customer relationship management, anticipate the consumer’s needs, and provide customized advice based on their financial situation.
The Benefits Of Digital Transformation In Banking
Although most banks do not have a choice of whether to adopt digital solutions due to customer expectation and competitive pressure from the transformation, there are many benefits of banks going digital. The advantages of digital banking mentioned before include a more seamless customer journey, a better consumer experience, greater access to data, and stronger fraud protection , which can be achieved through a well-planned digital transformation strategy.
Here are some other benefits of the the financial sector experiences through the digital transformation in banking:
- Increased customer intake and a more efficient banking process (including automated compliance features).
- More data-driven decisions and enhanced flexibility.
- Consolidated data, processes, and reporting.
- 24/7 access – The Digital Banking Report (DBR) found that 75% of banking organizations stated they had made moderate or significant progress in digital transformation by being digitally available around the clock.
- Better rates, lower fees – Stats have shown that the biggest shift in banking business model deployment is the expected increase in open platform players to allow for lower fees (from 8% to 26% of financial institutions in 2030).
- Better customer experience – A 2021 survey by Deloitte Insights found that digital-first banks routinely outperform traditional banks in multiple areas that matter most to customers, including simplicity of transactions, transaction speed, and the overall quality of the banking experience.
- Automated payments – As automated payments are highly convenient and on the rise, DBR found that digital transformation within banks for payments focuses on cybersecurity (96%), mobile experience (91%), mobile channels (87%), and data and analytics (83%).
How PDF Reader Brings Digital Transformation
Did you know that businesses (including financial institutions) save 78% more time and resources previously spent on document and signature management when migrating to e-signature services? In fact, when banks begin to adopt the innovations of digital transformation, one of the first changes they make is to integrate an e-signature and document editing service.
If your bank is seeking to convert to e-signature and online document processing, PDF Reader may be the digital tool for you.
PDF Reader is an all-in-one solution that allows users to view, edit, convert, and sign documents from your phone or computer, from anywhere. It is a simple software application with advanced compatibility to edit and organize documents with secure protection measurements. Not to mention – the software is 100% paperless, providing an eco-friendly advantage to meet companies’ Environmental, Social, and Governance (ESG) guidelines.
What really distinguishes PDF Reader from the other PDF document editing software solutions out there? Well, it has a beautifully simple user interface (reducing technological issues in the workplace) and is less expensive than its leading competitor. With the ability to convert, sign, edit, and organize documents with ease, what more is there to want?
Read on to learn the full list of advantages PDF Reader brings within the digital transformation:
- PDF Reader accelerates the growth of digital transformation in banking as it minimizes low productivity and high operational costs. Banks can easily digitize their document management, reducing the period of time spent tracking down signatures, and spending more time on their other mission-critical tasks.
- The intuitive app offers high mobility and streamlined, PDF signature management, increasing digital engagement for the bank.
- PDF Reader increases overall document risk control and security. It prevents PDF documents from unauthorized access by using passwords, watermarks, and protected download links.
- All documents signed electronically through PDF Reader are as valid and legally-binding as traditional paper signing. This means that both banks and consumers can have peace of mind that their data stays protected and confidential.
- PDF Reader allows financial service providers and consumers to complete both fillable and non-interactive PDF forms, including tax declarations, contracts, and agreements with personalized electronic signatures to help both parties go paperless.
Conclusion
Technology is evolving at lightning speed, which means that many of our traditional industries must develop with the digital transformation initiative to adapt. The financial sector is not excluded, and banks around the globe must advance their digital infrastructures in order to stay competitive.
In order to succeed, banks must implement a digital strategy. In this strategy, banks should center the digital services around the customer journey, utilize big data to enhance the customer experience, and place a high focus on consumer privacy. Before beginning to implement this plan, banks should be sure to stabilize a new digital culture within their firm, reassuring their employees of the benefits of the new digital systems they will be implementing.
There are numerous benefits for banks to incentivize them to implement digital services, aside from competitive pressure to adapt. These include an increase in general customers, stronger customer retention, a more seamless customer experience, more access to data, and less time and money spent on legacy system operations.
One of the most necessary digital solutions which are first implemented in the digital transformation is the digital PDF editor, and e-signature. For this, we’ve got you covered.
PDF Reader is the most seamless, efficient, eco-friendly, and cost-effective solution to take your firm one step further in the digital transformation. Edit, sign, scan, organize, and send documents with ease, and minimize your firm’s workflow.
Digitizing your bank’s workflow in the digital transformation is challenging. Let this step in your firm’s digital marathon be easy.
Choose the best PDF Reader for you and your team. Download PDF Reader today, and get ahead of the competition: