Every industry is affected by modern technology, the application of data and information, and new distribution channels. The dozens of large companies that have disappeared by not keeping up with the pace of innovation bear witness to this. Among them: Blockbuster, Kodak, Borders, Xerox, Nokia and Toys “R” Us – not to mention countless small businesses that don’t make the headlines.
Yet many financial institutions remain complacent in the face of the seismic changes that surround them and the urgent need to rise to the challenge. Often this complacency is caused by historic success. While the banking industry has certainly faced challenges over the years, most financial institutions have made good profits over the past decadeâ¦ and the financial outlook remains good in the near term. The way banks and credit unions have traditionally done business has served them well, so why should an institution fix what isn’t broken? More importantly, why should an organization take additional risk when the outcome may be less certain than what has been a long period of profitable quarters?
On the other hand, many banks and credit unions are starting to fall behind, losing market share to more technologically advanced and customer-centric competitors. Catching up is not easy, however, as organizations realize that it takes more than investing in new technologies to become a digital organization. It requires new platforms, new back office processes, and in many cases new people and skills.
Adopting a âwait and seeâ perspective or being a âquick followerâ are no longer viable strategies. In a digital world, proactivity, flexibility and agility prevail. If digital transformation is not part of your overall mission, your organization may never catch up with consumer expectations or competitive alternatives.
The first step in a digital transformation journey is to stop making excuses not to move forward. Here are some of the excuses we often hear and why they are no longer valid.
1. âThis is how we’ve always done business. “
Hanging on to the tradition and heritage of the ways of doing business sometimes makes sense. For example, a system of values, ethics and attention to the needs of clients and members deserve continued attention. But legacy processes can hinder progress and income.
New methods of data collection and analysis allow financial institutions to visualize consumers at a highly personalized level. Real-time insight and advanced analytics can also help reduce risk, identify opportunities, and deliver a much higher level of customer experience than was possible in the past. With data and information as a foundation, financial institutions can move from a âsales mindsetâ to a âtrusted advisorâ role, providing contextual recommendations that will expand relationships, generate revenue and build loyalty.
Overcoming the discomfort that comes from overcoming past successes is not easy for individuals or an organization. That said, it is imperative that senior executives, boards of directors and other leaders of banks and credit unions convince themselves and those around them of the value of digital transformation as part of a cultural upheaval. global.
2. âWe don’t have the talent or the skills. “
While this excuse is fundamentally true for most financial institutions, there are other ways to create and implement the changes necessary for digital transformation.
TO The 2019 Financial Brand Forumit was abundantly clear that solution providers are working together to create best-in-class solutions that can ‘kickstart’ digital transformation in virtually any size of business. In addition, most of these organizations add highly qualified specialists who can help financial institutions to become digital organizations. From coders to data analysts and strategists, these people can complement and complement the teams already in place in financial institutions.
Many vendors have also found ways to integrate their solutions with existing back office systems, reducing the time (and costs) of technology upgrades. Finally, many solution providers establish collaborative relationships with fintech organizations. Not only does this bring even more talent to the table, but it also allows vendors to check out potential fintech partners who can bring new innovations to a traditional bank or credit union.
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3. “Our customers don’t complain.”
Many consumers still do some of their financial transactions the way they always haveâ¦ they just do less the old-fashioned way (at a branch or over the phone). If your bank or credit union isn’t growing, it may be because you aren’t meeting the needs of the fastest growing segments. Consumers don’t always complain about not being satisfied with their needs, they just diversify who they do business with. Plus, new leads may never let you know that you ‘lost’ their business because you couldn’t meet their digital needs.
If you are growing, are you growing as efficiently as you could if your organization was more digital? Not only is the cost of acquisition much lower for digital acquisition, but the cost of serving a customer is also lower. Ultimately, your organization will not be competitive from an operating margin perspective, which will make it harder to compete and serve. In what ways could digital transformation help increase efficiency, reduce redundancies, and improve operations, all of which impact the overall customer experience?
4. âThere is increased risk with digital transformation. “
In fact, the origin of many digital transformation efforts began in the areas of risk and compliance. From assessing credit risk to standardizing compliance measures and managing business risk, the combination of data, analytics and new technologies has helped financial organizations keep pace with security and risk issues. confidentiality.
Additionally, with advancements in biometrics, blockchain technology, and other digital advancements, most transactions and back office operations are less risky with the support of new technologies. It goes without saying that with the elimination of paper and manual workflows, processes are much less risky.
5. “It costs too much.”
It is undeniable that the cost of digital transformation is not negligible. That said, there are many components of digital transformation that can pay off. For example, artificial intelligence and robotic process automation can lower the costs of redundant jobs, making the remaining jobs more strategic, intelligent, and human-focused.
Plus, automation and advanced analytics create more useful and timely data. The more data you have in your systems, the more data-driven decisions your organization can make, saving time and money. Finally, the cost of each type of digital transformation is significantly lower than it was just a few years ago. Organizations of all sizes are now able to invest in technology that was only available to the largest financial institutions just five years ago.
There is no excuse
Most organizations have logically determined that digital transformation is a necessity some time ago. Unfortunately, embracing the changes that occur during a period of sustained success is a big hurdle to overcome. That’s why it’s crucial that leaders stop making excuses and build the cultural and operational foundations that can involve their entire business.
The longer organizations wait to take this next step, the harder it will be to catch up with what consumers expect and what the competition offers them. You will fall further and further behind the market curve. Customers already have high expectations for the digital experiences defined by the tech companies they partner with every day. Failure to meet these expectations could make your organization the next Kodak, Borders, Blockbuster, or Palm.
It’s time to let go of the past and embrace the future. As daunting as the digital transformation may seem, moving forward immediately is essential for any bank or credit union that wants to stay competitive, especially in a market where customer experience becomes the differentiator.
There is no excuse.