Digital adoption in banking

Everything You Need To Know About Digital Adoption In Banking For 2019

I feel sorry for the banks.

No really, I do!


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I’m probably the only person in the world that feels this way. But I maintain you’ve got to feel for them. After all, the banking industry has got a challenging digital transformation on their hands.

“It’s a very interesting phenomenon in the banking industry when it comes to innovation.” Dr. Wei Ke, Head of Financial Services at Simon-Kucher & Partners

Digital adoption in banking is fraught with difficulty. Traditional banks are old and slow, but customers demand easy access and digital services. Yet they also want total security.

Unfortunately for the banks, speed is of the essence. Banking providers have until 2020 to get their digital transformation sorted.

“The urgency of acting is acute. Banks have three to five years at most to become digitally proficient.” McKinsey

Why is digital adoption in banking so important?

In an interview in The Financial Brand, Dr. Wei Ke describes technological innovation as a “necessary evil”. In a nutshell, digital transformation has to happen or you risk dying out.

Persuasive analysis by McKinsey suggests that “digital laggards” could see up to 35% of net profit eroded. Winners may improve profits by 40% or more.

2019 top tips for digital adoption in banking

1. Base your digital strategy on customer behavior

Dr. Wei believes that one major mistake banking providers make is in thinking they can “nudge” customers into a digital channel.

“The original thinking, the digital transformation, was more based on the cost cutting side because serving a customer through a digital channel is cheaper than a conventional channel like a teller. And so the original thinking is purely cost-driven, because banks wanted to cut costs.” Dr. Wei Ke, in The Financial Brand

What the banks are forgetting, says Dr. Wei, is how customers actually behave.

We’re reaching a peak in terms of smartphone penetration. In Australia, 88% of the population own one. Penetration is similar in the UK. And the US isn’t far behind.

To ignore this mass shift in consumer behavior is a potentially lethal business error.

2. Develop a digital strategy

Dr. Wei believes that banking providers tend to go with innovative ideas for no obvious reason other than a competitor has done.

“If one bank jumps on board with some kind of so called innovative idea, what tends to happen is then everyone starts to jump on board. But what’s usually not clear is whether they have a deliberate strategy or not.” Dr. Wei Ke, in The Financial Brand

This sort of “me too” mentality isn’t helpful.

When it comes to digital transformation, the key to success is not how many digital services you offer. Or how large your IT team is. Or how many digital systems your employees use.

Success lies in total adoption: total adoption of your digital tools.

For customers, that means they use and love your digital services. They use them to their fullest capacity. For employees, it means they understand and are productive using your digital systems for back-end processes.

Successful digital adoption in banking needs a strategy. And that strategy needs to address the full range of considerations in digital change management. Not just the technical.

3. Use tools to facilitate digital adoption

McKinsey advises that:

“Revenues and profits will migrate at scale toward banks that successfully use digital technologies to automate processes, create new products, improve regulatory compliance, transform the experiences of their customers, and disrupt key components of the value chain.”

A top tip for successfully implementing digital technologies is to use a Digital Adoption Platform (DAP).

The term “Digital Adoption Platform” was first invented by WalkMe. They created a tool that simplifies and accelerates the adoption process of digital systems.

The DAP uses AI and automation to provide contextual guidance to people learning digital systems. It works by placing a guidance layer over the top of existing digital systems to guide users as they’re using them.   

This speeds up adoption time. It also eliminates the “forgetting curve”, and provides useful customer engagement insights.

4. Look at engagement, not just tech

Dr. Wei believes that another barrier to digital adoption in banking is customer confidence levels. If I don’t feel confident I can perform the task or transaction digitally, I’m going to continue to come into branch.

“So from an internal organization standpoint, there need to be people in the banks who are not just designing digital features, but actually thinking about the customer engagement perspective and the barriers that customers typically face — and then putting that thinking into the technical design.

“The other side, of course, is you need to have organizational functions, sometimes I call it the “educator function” where you can proactively steer customers towards digital — or at least expose them to the possibility of using digital as a way to do that transaction.” Dr. Wei Ke, in The Financial Brand

To summarize, it’s time for banks to act. Successful digital adoption in banking is central to its future.

But don’t make the mistake of thinking this is all about technology. It’s not. It’s about the people using that technology.

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