Digital transformation in banking

3 Critical Insights Into Digital Transformation In Banking [2019]

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We’ve written before about digital adoption in banking and how important it is to successful digital transformation in banking

Banks are behind big brands in the digital transformation race — but more importantly, they’re missing a key element of what technology allows businesses to do: create personal connection. 

“…banks lag behind other brands in building these emotional connections. Best-in-class digital service providers, including Apple, Google, Amazon, Samsung, and Microsoft, topped the list.”


So, they need to do some catching up. 

Digital transformation in banking originally began as a cost-cutting exercise — “because serving a customer through a digital channel is cheaper than a conventional channel like a teller” says Dr. Wei Ke. “And so the original thinking is purely cost-driven, because banks wanted to cut costs.

If banks considered the full range of benefits associated with digital transformation, perhaps they would speed up their progress.

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

Dr. Wei believes that banks are forgetting how customers actually behave. In Australia, 88% of the population own a smartphone. Penetration is similar in the UK and the US

Ignoring this mass shift in consumer behavior, or not acting fast enough, is a potentially lethal business mistake.

3 insights into digital transformation in banking

1. Digital transformation in banking will improve customer engagement 

Banks need to wake up to the reality that the future of banking lies in mobile applications and online banking. Increasingly customers are turning to these two forms of digital banking worldwide.

One major bank, Bank of America, has caught on to this digital vision and now they handle more of their banking deposits through their mobile application than in branches. 

Currently, use of digital channels is high, but mainly for transactional purposes. For more consultative and advisory services, consumers still prefer traditional channels. 

However, their preference for higher use of digital channels in the future is strong — if:

  • The digital process could be made simpler
  • More regular banking services could be made available, digitally
  • More of their problems could be solved in real time
  • There was greater data security

Bank of America CEO Brian Moynihan recently stated that investing in digital banking capabilities has helped improve their levels of customer satisfaction.

2. Levels of satisfaction are relative

Across the world, customers are generally satisfied with their banks and these percentages are relatively high. Nearly two-thirds of consumers are completely satisfied or very satisfied with their banks. 

However, these statistics are not uniform across the globe. Customer satisfaction is different from country to country. In the Asia Pacific Rim, consumers in India and Indonesia are more satisfied with their banks than those in Singapore, Australia, or Japan.

In Europe, customers in Norway and the Netherlands are more favorable towards their banks than those in Germany, France, or Spain and clients across the Atlantic in Canada and the United States are even more satisfied with their banks than customers in Europe.

However, even satisfied consumers feel that their favorite brands outperform their banks in providing an excellent service via a digitally driven consumer experience.

So, banks with good customer satisfaction rates should not get complacent. Further digital transformation efforts are required in order to match loyalty and satisfaction levels with other consumer brands. 

3. The digital-emotional connection is a must

As paradoxical as this term “digital-emotional” seems, it’s a reality within the banking industry. There are three groups of users, known as Traditionalists, Online Embracers, and Digital Adventurers. 

Banks must make a greater digital-emotional connection with Traditionalists and Online Embracers to succeed in digital business and complete the digital cycle.

Traditionalists are the hardest group to impact with digital transformation in banking — 25% of have never used online banking and 44% have never used mobile applications for banking. They just see no value in either banking form. 

What’s interesting is that digital adventurers demonstrate the highest levels of satisfaction and are most likely to recommend their primary banks. Plus, they express a deeper emotional engagement compared to online embracers and traditionalists.

So, the pathway to deep emotional engagement and customer satisfaction appears to be through successful adoption of digital tools. This is a fascinating insight into digital transformation in banking, which other industries can learn from too.  

Conclusion: Generally, digital transformation in banking has been slow worldwide. Those banks that have embraced digital successfully are maintaining a healthy relationship with their customer base. 

Across the globe, the banking industry must become more congruent of their customer satisfaction rates. The way to accomplish this is to connect digitally and emotionally with their customers.  

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