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Digital Banking Transformation


Bank and credit union executives are bombarded daily with messages warning of the demise of banking as we know it if major actions aren’t taken immediately. From replacing legacy systems to implementing artificial intelligence, there are more priorities than any organization can handle at once.

As a result, many financial institutions end up doing nothing or focusing on initiatives that don’t move the needle on revenue, cost containment, customer experience or market value.

The question, “Where should we start?” has never been more important. There are mounting pressures from consumers, the government, new competition and shareholders to do something meaningful … TODAY. While you could debate which priorities are the most important, below are some practical ideas that should be considered. Most are relatively easy to implement, providing a foundation for broader strategies going forward.

Consumers increasingly are selecting bank and credit union providers based on their digital banking capabilities. It is no longer enough to just provide account balances and a list of recent transactions on a smartphone. Consumers want more advanced functions. Here are some of the mobile capabilities banking providers must offer:

Mobile Account Opening. While most financial institutions will claim they allow customers and members to open checking accounts or apply for a loan on a smartphone, a very small percentage can provide end-to-end support without visiting a branch. This is unacceptable. There is no reason why a consumer must visit a branch to provide a signature, verify their personal information or transfer funds. There is no process in banking more archaic than requiring a new customer to visit a branch. Fix this first!

Funds Transfer. Consumers expect to be able to easily transfer funds between accounts as well as to accounts at other institutions. If you already provide this service, determine if the process is as simple as it can be. Simplicity can be measured by the number of keystrokes needed to complete the task.

Bill Payments. “Set it and forget it” should be the mantra for mobile bill payment capabilities. As with funds transfer, make sure the process uses the minimum number of keystrokes and is intuitive. Remember, if it is hard to determine how to set up this capability, it doesn’t matter how easy it is to use. Consumers will have already abandoned the process.

Mobile Deposit. Several studies have found that customers will rate your entire mobile banking experience based on how easy it is to deposit a check with their smartphone. If the customer needs three or four tries before a check is actually deposited, there is something wrong. The customer will move to another provider.

P2P Payments. There is no room for internal politics when it comes to person-to-person payments. Consumers will use the apps that the majority of their friends use regularly (Venmo, PayPal, Square), not necessarily the app that you and your fellow banks and credit unions have a stake in (Zelle). Make it easy for your customers to use the P2P app they prefer and use will increase.

Push for Engagement. There is a good chance consumers aren’t as familiar with your mobile banking application as you are. Commit to continuous education and promotion of your mobile banking capabilities. Use short-form video and easy-to-access tutorials to educate consumers and provide ongoing messages to customers who have not fully utilized the tools available. Until you have high penetration and utilization of your mobile banking app, you still have work to do.

Several other mobile banking functions should be improved at most financial institutions, and most mobile banking apps are in serious need of a redesign, but if you can fix the items above, you will be well on your way to digital banking improvement.

Remember, attention must also be paid to the legacy back-office operations that hinder digital banking innovation. Rethink internal processes to set your institution apart from the competition.

other mobile banking functions should be improved at most financial institutions, and most mobile banking apps are in serious need of a redesign, but if you can fix the items above, you will be well on your way to digital banking improvement.

Remember, attention must also be paid to the legacy back-office operations that hinder digital banking innovation. Rethink internal processes to set your institution apart from the competition.