It is, without a doubt, the subtle yet immense disruption that digital transformation brings to
the world as we know it. Business processes, services, and even goods are becoming
digitalized at an alarming rate with no end in sight. This change is affecting all industries,
leaving out no one. The finance industry, which stands at the center of every economy, is
also not exempted by this innovation.
The financial industry can be said to be among the forefront industries that have experienced
innovation the most. The industry has gone through various changes, from the barter
method to the use of coins and paper currency to the recently digitized currencies. Several
products have been added due to these innovations, including debit and credit cards,
automated teller machines, and e-wallets. Now when choosing a bank, we do not bother
about the location because we can bank and process transactions from anywhere.
The exciting thing is that digitalization is still ongoing, with organizations in the financial
industry reviewing the implementation of processes and business models to satisfy customer
experiences.
What is Digital Transformation?
At its essence, digital transformation involves the integration of technology into processes,
systems, and products. It is converting products to digital products, optimizing traditional
methods to increase revenue, and innovating strategies to serve more functions adequately.
In the financial industry, digital transformation means implementing fundamental changes to
operations and how financial institutions deliver value to their customers. Financial
institutions such as banks that adapt accordingly to the change that digital transformation
brings can expect immense benefits. Benefits such as reduced cost of operations,
maximized revenues and customized processes result in higher efficiency, are amongst the
various reasons why banks are integrating digital transformation.
What Drives Digital Transformation In The Financial Industry?
To an extent, one of the primary driving forces of digital transformation in the financial
industry is the customer base. Customers such as millennials and generation Z showcase
buying attitudes that do not work well with traditional services.
For example, a millennial would instead open a bank account and process transactions from
the comfort of their bedroom than go to the bank during the day to carry out similar
processes. With the advent of things like remote work, key strategies adapt to systems that
overlook location and even time.
The new customer base is interested in getting products and services digitally. Organizations
that want to stay in the game have to either hop on the digital train or wait to die out. Even
without the customer base, technological innovations are affecting processes more than we
ever imagined. Things are changing so fast that sometimes, we find ourselves struggling to
keep up.
This technological age spurs industries to adopt innovative advances and make decisions
that are flexible yet efficient.
Digital transformation in the financial industry centers around the following:
● A more customer-centric approach.
● It is personalizing services to each customer.
● Agility and flexibility in processes.
The customer-centric approach allows banks to align the right products with the right
customers. This approach is beneficial as it reduces market costs due to streamlining
options while generating higher revenue. Personalizing services ensures that you retain
customers after attracting them.
The rate at which new products and services are produced with the burst of innovation
emphasizes the importance of agility. Agility here means making optimal changes to
processes that can set banks up for great deals on fantastic business opportunities.
Why is The Financial Industry Adopting Digital Transformation?
The financial industry is adopting digital transformation due to the following reasons:
- The market is moving online
- It is easier to acquire new customers
- Personalized customer experience
- Personalized customer experience
- Standing strong amidst the competition
The market is moving online
Traditionally, we would choose a bank to open an account by selecting the nearest to us
before considering the user benefits. Hence, it is not strange to see many bank physical
branches in one region. Banks kept building more physical units for customers in that region
to access them easily.
Now, however, digital transformation is removing the requirement of location. Rather than
the nearness of a physical branch, we look at how a bank is perceived not only by our
immediate environment but the online community. We consider how the bank treats their
customers, their online presence and how they respond to complaints. With digital
transformation, financial institutions can increase their present customers’ trust and attract
new ones, using good digital marketing.
It is easier to acquire new customers
As much as customers require financial institutions for saving and investing, financial
institutions also need customers to grow as a business. Digital transformation puts financial
institutions into a more active role in acquiring consumers that require financial services
more affordably and conveniently.
For example, the internet provides various platforms such as social media, which enable
financial institutions to target consumers interested in their services more effectively.
Personalized customer experience
With the aid of digital transformation, financial institutions can know and understand their
customers’ interests and prospective consumers. By leveraging the power of data, financial
institutions can tailor their financial services and offerings to their customers’ needs rather
than making decisions based on guesswork. Customers are pleased with personalized
experiences, which plays a crucial role in increasing their engagement.
Standing strong amidst the competition
Banks can now act on market trends, with ease, at a larger scale, and modify their
processes or services efficiency due to digital transformation. With technology, banks can
make better decisions on building products to acquire a new customer base, remove a
product feature or add a new service that customers require. It is easier to make such
decisions as banks have access to customer data that banks can analyze to make informed
decisions.
This helps banks to stay innovative and adaptable in a very competitive industry. Digital
transformation facilitates the evolution of the traditional banking method to accessing
financial services through social media and mobile apps.
Conclusion
Digital transformation is focused on satisfying the customers’ needs, providing experiences
that drive customer engagement and trust. It is more than mobile apps and online
functionality. Financial institutions have to adopt it quickly to remain relevant in the industry
and expand. Hence, financial institutions should embrace digital transformation.