The call for retail and commercial banks to advance digital capabilities has certainly gotten louder since the onset of COVID-19, but the customer expectations that create this need have existed for years.
The needs and desires that customers want from their bank are both functional and emotional, in that:
- Functionally, the channels, technology, and platforms need to be built, designed, and connected in a way that enables a seamless UX and quick self-service. The easy-to-use nature of FinTech platforms is the #1 reason that consumers choose these solutions over traditional banks.
- Emotionally, economic resources and security are basic human needs according to Maslow’s Hierarchy of Needs. Progressing up the hierarchy to provide next-level services includes emotional needs such as connection and self-esteem, which banks can help customers build with personalization and support in financial wellness and goal setting.
When the stakes are as high as they have been over the past few months, functional and emotional needs become even more tightly connected — for example, the functional misfires of online banking platforms in the midst of PPP loans and stimulus check access are inextricably tied to emotional responses from their customers and clients.
As stated by KPMG,
“In the post-COVID world, digital desires are now digital demands.”
A Model for Advancing Digital Maturity
To match digital capabilities with the accelerating rate of change in the market, our team put together the Banking Digital Capabilities Model, which highlights how the agility of FinTech and Big Tech organizations has shifted consumer and client expectations, and what steps banks need to take to meet new expectations.
According to research from Forrester, only 14% of global financial services companies believe that they have the right technology infrastructure and applications in place to deliver the digital experience their users expect. This challenge is multifaceted at large banks that have many business units with different expectations and visions for the digital experience.
At the core of delivering a banking digital experience centered on customer expectations is the need to advance technology capabilities across:
- Data & Analytics
Beyond upgrading legacy mainframe systems and rolling out new digital product offerings, the highest tier of digital maturity requires integrating systems across business units to create a client and customer experience that is secure, elegant, and performant.
Why it matters: Consumers expect real-time, context-based services.
The sharing economy plus increasing customer-centricity has led consumers to expect data-driven and context-based services, which requires banks not just to capture lots of data, but even more importantly to capture the right data, and be able to connect and use it to drive actionable insight. Users want real-time insights, real-time payments, and real-time fixes to problems that they encounter — all of which require a modern core with best-in-class APIs that dissolve silos between functions.
Today’s capabilities: Disparate FinTech features layered on or in separate systems.
Most banks have some disparate and retrofit solutions in place to enable advanced capabilities. Many partner with or even acquire FinTech companies to level-up a specific offering. However, concerns abound over connecting the new technology with existing legacy systems.
Tomorrow’s capabilities: Architecture that integrates with everything.
IT leaders need to prepare their enterprise architecture to connect to anything. Beyond layering on capabilities with FinTech acquisitions or partnerships, managing the integration of new technologies with upgraded legacy systems will ultimately deliver the experience users are looking for.
Why it matters: 300x risk of cyber attack.
Financial services companies are 300 times more likely to be targeted by a cyber attack than companies in other industries, and the cost of cybercrime is rising dramatically, estimated to be $6 trillion in 2021 compared to $2 trillion in 2016.
Today’s capabilities: Reactive, costly detection.
Research shows that financial institutions are well-equipped to detect security threats, information disclosures, breaches, and other types of cyber attacks, but not to actively prevent these crimes.
Tomorrow’s capabilities: Proactive threat modeling.
With expanded security and automation capabilities, banks can proactively consider: What is it that we’re trying to protect? What are the ramifications of that data getting out? Who are we protecting this data from? Answering these questions at the beginning of a project enables banks to develop threat modeling and monitoring, lending itself to building specific, proactive capabilities against what could go wrong.
Data & Analytics Capabilities
Why it matters: Analytics inform both the customer journey and product lifecycle.
Experts from the Financial Brand indicate that one of the top strategic priorities for 49% of financial institutions is to enhance data analytics capabilities. Utilizing analytics to enhance the customer experience is critical to retain and engage current customers and clients, as well as targeting new segments of customers with the right message at the right time. Analytics on user behavior and preferences within digital products also informs feature prioritization and product roadmaps.
Today’s capabilities: Disconnect between data sources limits utility.
Most banks today have disparate data warehouses, some degree of AI and data lakes to utilize behavioral data, but high degrees of disconnect between these resources, which dramatically limits their capabilities.
Tomorrow’s capabilities: Data-driven insights take the guesswork out of product innovation.
Advancing data capabilities goes far beyond just capturing the right data, but also ensuring that the data captured has utility for both the bank and the customer. Maximizing the utility of data requires an agile approach to turn insights into action, plus an integrated architecture that can capture and model data effectively.
How to Get Started: Assess Your Digital Maturity
Whether your bank has been in the throes of digital transformation for years, or is just getting started, assessing the current state of your digital capabilities will help you navigate today’s challenge in order to advance tomorrow’s capabilities — as well as continually ensure alignment among internal stakeholders for a shared vision of digital transformation.
Across architecture, security, and data/analytics, your level of digital maturity directly impacts the user experience, with downstream effects to customer acquisition and retention, customer LTV, and the bottom line.
To help you assess where you are today and get where you want to go tomorrow, WillowTree put together an executive’s report on digital banking to determine your bank’s level of digital maturity.
Download the Banking Digital Capabilities Model to learn how you can continue to elevate your digital product experience and future-proof your technology, and don’t hesitate to get in touch with our team for support.