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The Right Time for Banks to be Bullish About Digital Transformation is Now

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So many factors are lining up for the financial sector to focus on developing new and exciting products for a digital-first generation.


by Percy G. Johnson, Jr, Vice President Agile Solutions

Study after study confirms that the U.S economy is extremely robust and showing few signs of slowing down. While there are always macro-economic threats on the horizon, and the longest bull market in history cannot go on forever, it’s fair to say that this is an excellent time for banks to be expanding their offerings, trying to invest in new systems and processes, and taking a chance on digital transformation to streamline the way that they work.

Consumers are more open than ever to mobile banking, to smart branches that incorporate cloud technology and even to blockchain solutions that are changing the definition of what a bank can and should be doing.

Where is that change coming from? A mix of cloud technology, big data solutions, the potential of Artificial Intelligence (AI) and the capabilities of always-on mobile devices are all creating a truly awesome foundation for innovative new banking practices.

Coupled with a red-hot economy and a consumer who is more trusting than ever before, there’s never been a better time for banks to be be bullish on digital adoption.   

Risk vs Reward in the case for transformation

Our understanding of what financial services can and should offer is changing so fast and so dramatically, that it feels almost impossible to “sit it out” and continue to offer the same old products in the same old ways. Adoption of technology is moving at breakneck speed. Processes and offerings from as little as five years ago already feel outdated and impractical.

Consumers are used to mobile-centric, transparent solutions, and if they’re not getting them from one bank they are happy to move onto another.

Banks need to be smart in defending their key products and services, and they need to make their branches - the face of the bank to most people - smarter than ever before.

What does a smart branch look like? In a recent blog post entitled “A Bank Branch for the Digital Age”, research giants McKinsey explain that “Smart-branch transformation builds on three pillars: the seamless integration of cutting-edge branch technology, which has become cheaper, more reliable, and more accessible; the adoption of radically new, teller- and desk-free branch formats at every location; and the use of digital technology and advanced analytics to improve the operating model in branches, including personalized, data-driven sales and real-time performance management and skill development.”

The upside to going digital and really getting it right is enormous; increased revenues, lower costs, faster processes and better coordination between front and back offices. A good digital product can turn a small bank into a national, or even an international player in no time. Naturally, that’s not always going to happen but the good news is that the risks of transforming are all relatively contained.

Image Source: Shutterstock

Four reasons why the risk of transformation is so low

1. You can scale what you offer up and down easily: There is no real need to take a chance on an expensive new process and then wait to see if it works or not. Instead, banks can target a small segment of their users, employ A/B testing to see what resonates with them, iterate a number of times until it’s perfect and then scale it up when it’s working or cut it back when changes need to be made.  

As long as the data is good, it’s easily accessible and the insights that you’re deriving via your analytics are solid, then there’s no reason a good product or solution won’t scale easily across a whole organization. 

2. Use the cloud to dramatically reduce hardware costs: Gone are the days when a bank had to manage its own databases, and invest heavily in expensive hardware that needed a dedicated space and an IT department to manage it and service its problems. Now most banks rent the storage space that they need on secure cloud servers, and rely on AI firms to manage their databases and provide insights.

AI Foundry has extensive experience in working with large and small financial institutions to provide these kind of services.

More and more banks are partnering with niche-focused fintech companies that can provide the specific solutions that they are looking for. 

3. Build an online community: The emergence of social media communities, mass email technology and AI-driven insights from both online and ‘bricks-and-mortar’ locations means that banks know more than ever about their customers, and can reach them instantly with targeted messaging that speaks to them specifically.

Employees can and should be engaged as ambassadors for a brand that they know better than anyone else. The power of a community that champions a brand cannot be overestimated. It means that your products and services will reach more people without the need for spending large advertising dollars to get their attention.

4. Make decisions informed by the data: There is no reason why your digital transformation should be driven by hunches and guesswork. The amount of data generated by a bank about what’s working and what’s not working is tremendous. It needs to be captured efficiently and managed in ways that make it secure and still accessible so that it drives innovation.

One of the biggest challenges is to capture all the incoming structured and unstructured data; from online forms, social media posts, web and email transactions and paper-driven processes. AI Foundry has invested heavily in smart, data-capture technology that can handle multiple formats of data seamlessly.

Investing in data-driven processes

The key idea to keep in mind when you’re driving digital adoption is the idea that your data should be providing access to ‘actionable intelligence’. Insights that you can use in a practical and meaningful way. By streamlining & automating manual mortgage processes, AI Foundry enables organizations to free up more time to focus on funded loans, strengthen customer loyalty, maintain compliance and to dramatically increase the ease and simplicity of onboarding new consumers.

The processes that AI Foundry has developed are able to reduce data-intensive, repetitive tasks by over 80%, which has a transformation effect on employees and the quality of data received.

For more on how AI Foundry thinks about data and actionable intelligence, visit the agile solutions overview web page and get in touch with a company representative.

Conclusion

There’s never been a better time, or a better economic environment for banks to be innovating in the digital space. Furthermore, the risks of not innovating and falling behind the curve are growing by the day. And ultimately, if the products and services you develop don’t quite fulfill all your digital dreams, you’ll still end up with better data, a more efficient process, and a clearer sense of how your bank should be meeting the challenges of this digital economy.

SOURCES:

https://www.mckinsey.com/industries/financial-services/our-insights/a-bank-branch-for-the-digital-age