Key Digital Transformation Trends in the Banking Industry

Key Digital Transformation Trends in the Banking Industry Banks and financial services are going digital with the help of data entry services to deliver value to the customers and improve efficiency.

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Digital transformation is the integration of digital technology into all areas of a business. That integration leads to fundamental changes in how the business operates and delivers value to its customers. Today, banks and financial services with the help of data entry services are going digital to deliver value to the customers and improve efficiency in business processing.

Banks running on a digital core can see reduced costs and streamlined processes. This end-to-end integration helps provide a more seamless, engaging customer experience. It also makes room for further business transformation with new digital technologies like blockchain and artificial intelligence.

According to a report by Acxiom, digital transformation in banks include various trends like growth of partnerships, enhanced use of consumer data, the impact of fintech firms, enhanced ways to build engagement through marketing, and the impact of a platform economy. In 2020, the digital transformation trends are as follows: 

Collaborations: For any bank or financial institution to move forward requires the right strategic partnership. Here, the right strategic partnership is collaboration. With the right strategic partners comes greater agility and seamless integration with systems and products. For good collaboration there should be flexibility within the partnership to adjust to marketplace changes without needing to renegotiate the relationship. Further, the partnership will extend beyond traditional providers to include fintech firms, big tech organizations, communities and potentially even governmental units. For example, for a better integration within banks and credit unions with less internal and external friction, solution providers may partner with each other. This network of providers along with new data sets, advanced analytics, and modern communication platforms allow personalized solutions and increased engagement with the customers.

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Better data utilization: Improved source of data helps to drive valuable insights and it provides an opportunity to proactively identify consumer needs and the appropriate product or service to be offered. It allows banks and credit unions to deliver improved results by combining both traditional and non-traditional data. Financial marketers and product managers have access to lifestyle and psychographic data, financial and nonfinancial product ownership and purchase data, channel preference insights, brand loyalties, geo-location data and even insights from social media use. These data along

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with advanced analytics provide purchase proclivity and personalized communication that the consumer will welcome and can be delivered to the device or platform the consumer prefers. 

Non-traditional players: Financial institutions often lack in speed, innovation and focus on consumers and so more fintech firms have not only entered the banking ecosystem, but have succeeded in moving market share. Fintechs compete by serving the consumer without being tied to a legacy of operations and organizational rules and structure. This allows them to provide products and services that are faster, easier or even cheaper than what traditional banks can offer. As per Acxiom report, the movement toward open banking and APIs will enhance the speed of change and the technologies helps to align with new opportunity easily. The consumer always looks for speed, simplicity and the ability to complete a task easily, and legacy financial institutions do not provide this level of experience. But smaller fintech organizations, and big tech firms are now leveraging their platforms to combine shopping, ride-sharing, searching and engaging with new distribution options for traditional financial services. Legacy financial institutions have always been trusted more by consumers, but now big tech firms and smaller fintech firms operational in the field for some years now are also receiving trust scores almost similar to legacy banks and credit unions. Mid-tier and smaller financial institutions could be affected by this trend in the near future.

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Platform economy: A platform is a business model which allows various participants to connect, interact and exchange values. The financial services industry has 26 platform organizations, according to a KPMG analysis. A good platform offers products and services from various organizations to serve the need of the customers. Most financial institutions have not come close to offering a platform solution which could be a problem in the future. Three challenges facing financial services marketers competing on platforms are over-personalization, unintended consequences of data sharing and cloud adoption immaturity.

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Improved marketing performance: With the help of data, advanced analytics and new marketing technologies help to target audience and ensure better engagement. Effective multichannel marketing is essential to stimulate new customer and organic growth. The challenge here is that the ability to measure the effectiveness of increasing investments in

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marketing is poor. With many organizations using multichannel marketing campaigns, it is vital to measure the effectiveness of each channel to know the best cadence and for the optimal ROI. With every year, technology is impacting banking, consumers and regulators and the consumer’s expectation is rising. So, as consumer expectations change, so must the financial institutions that serve them.

Digital transformation helps banks to enjoy improved customer interactions including basic personal data, transaction history, browsing history and so on. For any financial organization to undergo digital transformation, first it should convert all data into digital format. Utilizing a good data conversion service is the easy and affordable way to replace paper files with a digital archive and it is being used all over the world in all industries and sectors. With the help of accurate data, a bank can see that a problem exists and proactively contact a customer as soon as possible and ensure an effective solution. It is also important to respond quickly when a problem is brought to their attention by providing a customer service representative all the relevant information in real time. Financial institutions will continue to struggle against a fast-changing technology. The right technology team and partnership can provide executives with the strategy and road map to realize measured, ongoing success and create innovation.

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