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What are the Banking Industry Challenges Digital Transformation can solve?

What are the Banking Industry Challenges Digital Transformation can solve?

Chief information officers (CIOs) and their teams at leading FIs are busy embracing the next primary phase of digital transformation.

Unsurprisingly, C-Suite bankers foresee and prepare for the “new normal” environments, such as remote working, unprecedented cyber-security risks, and an accelerated shift to digital channels. The challenges are formidable – stay competitive in today’s high-stakes, low-margin business climate that begins to limber up post the pandemic.

As the world’s top banks see the urgency of the situation, they must meticulously navigate through a maze and combat the disruption unleashed by new-age business models proliferated by the deeply funded FinTech. A case in point – An MIT Study highlights how venture capital in FinTech has grown by 600 percent in the last four years.

 This blog deliberates on the challenges the traditional banking sector faces that emergent technologies can fix.

Managing costs while dealing with Investor Impatience

Incumbent banks are often measured on a separate set of standards by investors who look for steady profits. When it comes to established FIs, investors are less willing to take chances than the nimbler and niche FinTech’s.

In this climate of continual business model innovations, legacy institutions can be successful if they embrace Technology as a powerful enabler. And for this, they need to decrease their costs – by modifying operations and initiating enhanced cost optimization efforts.

Additionally, accelerating internal digitization will produce a better-utilized employee task force.

Transitioning away from Legacy Systems

Digital Natives and Millennials are quickly becoming a critical demographic for retail and investment banking.

Their demands for personalized and frictionless services cannot be met with banks beset with legacy mindsets or technologies. For instance, the COBOL PL has been around for half a century – still finds use in many large financial systems.

Similarly, back-office Technology needs an overhaul – changing from anachronistic, siloed systems to a digitally interconnected ecosystem is a logical next step. Another crucial aspect technology is fast transforming is Regulatory risk reporting and compliance. Regulatory Tech is a must to respond to the fast-changing risk, security, privacy, and compliance regulations.

In sum, deep inside the antiquated ‘banking walls’ sits the importance of Technology.

People first, Technology second.

It is essential to remember how people, not Technology hold the key to digital transformation mandates. This insight can be evidenced in how many of the FIs go about creating their culture. Doing this successfully is what makes digital transitions less burdensome and more effective.

But this is not a straightforward or cookie-cutter process as each situation calls for examining leadership’s perspective around employee empowerment and the company’s decision-making procedures.

Seventy percent or more of financial services CEOs feel that insufficient training and a lack of necessary skills is the most significant obstacle to launching a new digital endeavor.

Nevertheless, to foster innovation, legacy institutions must prioritize human values – high emphasis on continual education, encouraging a safe environment to experiment, and promoting progressive people policies across compensation, growth, and exposure.

The takeaway is institutionalizing unique practices that translate happy employees into satisfied customers. Again, there are advanced learning tech options that can make a difference.

Changing Perspectives of Today’s Chief Information Officers

CIOs are critical stewards of digital transformations across most organizations.

They must clearly articulate the business goals and ensure that tech initiatives deliver quantifiable business value, creating lasting value over incremental progress.

To solve the industry challenges, CIOs must move beyond “managing IT.”

Their priorities must focus on the crucial customer trends – such as attracting mobile-first eCommerce consumers to incorporate AI processes that enhance decision-making or amping up risk detection proactively.

To do all this with a measure of success, CIOs must establish the role of Tech as a business and innovation partner. After that, embracing agile, end-to-end automation, PaaS, and cloud systems to forge powerful ecosystem partnerships will create unprecedented value.


When it comes to digital transformation, financial institutions face obstacles both inside and externally, some connected and some not.

In the Banking industry, there is no magic cure to all challenges, but there can be a set of standard operating procedures that deals with most known variables and problem statements. Without falling into the one-size-fits-all trap, incumbent banks must move their digital transformation agendas from “nice to have” to must-have.

After all, more than playing a catch-up game, the main thrust for leading FIs is to seize opportunities that can disrupt business models, boost customer-centricity across the organization, reimagine their brand, rapidly explore new products and optimize digital operations to create unparalleled and frictionless CX.


Managing Customer Experience in the Fintech Industry

Managing Customer Experience in the Fintech Industry

Flipping the odds for digital transformation success in the Banking and Fintech industry depends on customer experience. An influential study that dissects digital transformation success pegs banking as having the second highest rate after Telecom, Media, and Tech sectors.

Reviewing the key imperatives that bring digital transformation success – such as integrated strategy, leadership commitment, agility in governance, or Tech platforms that combine data and digital – ultimately pivot around one common element: Customer Experience.

This blog deepens into the Banking CX aspects and elaborates on best practices.

The Banking or Fintech Customer Journey.

Starting with an impulse, or a need for information, a typical banking customer journey comprises many interactions that culminate in the customer’s decision to purchase.

While each action may appear hidden, it touches a specific part of the banking organization – whether the operations model, processes, or the core technology platform.

Before addressing the best practices that govern customer experience journeys in banking, let’s round up the top three errors that are often costly.

  • Significant investments in digital banking solutions may be focused on CX but do not integrate well with the organization’s back-end machinery (processes, regulatory, and risk protocols)
  • Business and Technology tracks may be misaligned in their CX priorities and responsibilities.
  • Siloed organizational behavior may be content with incremental improvements and miss out on the quantum opportunity to overhaul the organization’s CX capabilities.

CX components detailed

Managing Customer Experience in the Fintech Industry – Three Critical Practices

While many generic best practices apply across industries – listening to customer feedback and taking prompt actions, Improving the UX and UI touchpoints, and going omnichannel – let’s focus on niche CX best practices and their underlying mechanisms.

People First, Technology Second.

Be it chatbots and virtual assistants for consumer education, creating seamless UX that is intuitive, or learning from specific digital native audiences, one profound principle for designing successful banking CX programs is – to think of customers from a 360-degree perspective.

So even if an AI use-case experimentation is underway and reams of customer analytics data are revealed, it is pertinent to connect it to customer behavior, preferences, and pain points. When technology is complementary to customer-centricity principles, banks can create hyper-personalized experiences that customers demand today. The overarching lesson is that banks must see customers as co-creators and evolution partners.

Automating for Frictionless CX

The efficiency of customer service (and overall CX) can be enhanced through the automation of administrative tasks. End-to-end automation is an excellent choice for extensive, repetitive procedures, as digital data extraction makes it possible to verify and validate documents with ease.

Notifying, communicating, and providing access to information with customers is often a straightforward automated process. For creating a bank account, it is easy to collect and verify relevant consumer information across several platforms and under specific criteria.

This can be automated entirely, relieving stress from the already-burdened staff in the banking industry. Automation facilitates quicker service, boosts client loyalty, and directly impacts the top and bottom-line metrics.

Embracing the Trust Equation.

To rid customers of their confusion or anxiety is to gain instant trust.

A widely cited Banking Trust Barometer report highlights how a climate of “information bankruptcy” can erode an organization’s immediate and longer-term reputation. So, while customers’ involvement may be restricted to opening an account, applying for a home loan, or buying a specific insurance product, it is pragmatic for banks to educate them across the more significant aspects of the economic outlook, market, and investment trends, and noteworthy regulatory changes that they should anticipate.

A successful banking CX program evaluates various UX, and UI touchpoints from the lens of “Trust created Vs. Trust lost.” Consider, for instance, the Monzo lending app that uses reminders to ensure customers celebrate their on-time payments or the TransferWise app that offers pricing calculators for customers to understand their charges – two examples of bolstering customer confidence at appropriate moments in their journey.

Finally, how big is the “CX-stakes”?

A BCG research study credits exceptional CX as the springboard that differentiates the market leaders – Amazon, Apple, and Google.

Seen across a ten-year run, companies with higher customer satisfaction scores quickly generate twice the shareholder value over the average performers.

The firms report higher price-to-earnings ratios, greater total shareholder returns, and better earnings.


While the entire digital transformation journey for banks involves processes, rules, engines, scalable tech-ops, governance compliance, and increasing usage of intelligent self-learning systems, the gains of doing the right thing at the right time (or the CX-beneficial actions as mentioned above) will be rewarding in the longer term.


How does Customer Experience Drive Digital Transformation?

How does Customer Experience Drive Digital Transformation?

Even before 2020, digital natives and new business models that put technology first were causing significant changes in the financial services industry. So, when the Covid-19 pandemic caused shutdowns worldwide, all financial services providers were forced to offer remote engagement options to their customers, whether or not they were ready to do so. This was true for both direct-to-consumer payments and business-to-business payments with small businesses.

BCG research shows that companies with the highest customer satisfaction scores have created twice as much value for their shareholders over the last ten years as companies with the average score. These companies have made more money, but their price-to-earnings ratios have also increased, which means that their total shareholder return has also increased. This customer insight makes Amazon, Apple, and Google market leaders. 

The Fast Changes in the Banking World

Financial institutions, especially those still relying heavily on a brick-and-mortar model, had to make significant changes to adapt to an entirely virtual market. Transactions moved online, customers wanted to be able to help themselves, and automation-driven tools helped customer experience teams grow to handle the rising number of contacts. It became necessary for businesses to get products to market quickly without compromising data security and measures to prevent fraud. Then, long-term resilience required the flexibility to grow or shrink in response to repeated closures and changing contact rates.

Fintech, already tech-savvy and flexible, was better prepared to weather the global storm and grew faster than its more traditional peers. But many well-established financial institutions could change quickly by using new cloud-based services and a scaled, agile approach to drive efficiency and speed.  

CX should be an essential part of digital transformation.

During the pandemic, more people worked, shopped, and banked from home or on their phones. This made businesses and customers rely more on digital technology. Health and safety became a more significant part of the customer experience in places where personal interactions were still needed. Behind the scenes, a lot was also changing in the financial services industry. The number of calls to contact centers went up, and most banks saw an increase of more than 20% in the number of digital accounts opened.

The following direct cause-effect relationships amplify the CX efforts banks must make.

Innovating the ‘new’ in human experiences. 

Incremental gains of 5 to 7 percent yearly do not impact the bottom line. For improvements to have a natural effect, they need to be between 30% and 50%. Companies are graduating to using human-centered design to create customer experiences that change the game. This means building a robust design function that hires, trains, and supports designers who focus on people. This method allows for significant changes by starting with a goal for the future and working backward to get there.

Team Integrations across the company. 

Companies must combine their budgets and projects for change initiatives into fewer, better-coordinated efforts focusing on customer journeys or customer-centric value streams. This way, the changes sustain and are genuinely transformational. For this strategy to work, companies must change how they handle governance and funding. Additionally, teams should be allowed the power to make decisions about design and implementation, while leaders set the direction and give permission to spend money.

Synchronized customer and channel interactions. 

Increasingly banks realize that they must first create a central database where they can store all the information about how each customer interacts with them across all channels and business lines. So, everyone in the organization will have the same level of understanding about the customer, which will reduce friction. Next, companies need to create a highly automated solution, usually powered by artificial intelligence, that can continuously collect and analyze data for each customer and suggest the best next step.

Relentless Customer-First Culture.

Creating a culture that puts the customer first is crucial to significant change. It means infusing everyone’s job with a healthy dose of CX and rewarding behaviors that lead to outstanding customer accounts. For this to happen, effective changes are needed across – leaders, senior executives, and front-level teams.

Impact beyond surveys. 

Companies are used to measuring CX by looking in the rearview mirror. They use CX metrics from surveys done after the experience has happened. But survey results don’t always tell us what causes CX problems or how they affect business. And because the metrics come after the incident, there aren’t many real-time chances to change course. Therefore, the new measurement must track every real-time customer interaction with the company and third parties. To build this more complex system, incumbents must consider the rich insights from crucial customer journeys.


For banks to turn their CX into high returns, a radical overhaul is needed for CX programs, supported by an operating model that puts customers at the center of their business. As with any significant change, it’s essential to start with a big picture and see how current CX capabilities compare. Once the gaps have been found, companies should plan for how to fill them.

Future success will come down to three things.

First, for a business to be resilient in the long run, it will need a more flexible and dynamic model. Second, we need to make it easy for customers to use their financial services, products, and plans by giving them simple digital tools and ways to get help. Third, we must never forget how important it is to combine technology with live care when a human touch is needed.



Eight ways to improve customer experience (CX) in 2022

Eight ways to improve customer experience (CX) in 2022

The last three years have surfaced momentous CX lessons for brands and organizations. While customers connect in omnichannel ways today, the expectations are the same: human touch.

CXOs of leading organizations are keen to ensure that customers have a consistent experience because that augments customer loyalty, increases retention, and turns them into brand advocates.

The opportunities to leverage CX directly relate to a company’s growth. From bringing down friction in their interactions to finding out ‘aha’s’ through Voice of customer programs, CX as an organizational discipline is evolving quickly.

Gartner says 3 out of 4 B2B and 6 out of 10 B2C organizations are yet to move into advanced stages of CX maturity.

Here are ways to improve CX in 2022 radically.

Like most business aspects, technology (its investments and mastery) is key to cultivating winning organizational CX strategies.

Personalize at scale

Most brands want their platforms and products to be available and consistent 24X7, in ways that meet the right customer at the right time. With the growing advent of AI and ML practices, personalization at scale is the way forward for most leading CMOs and CXOs.

Customer data platform investments 

Moving beyond enterprise CRM systems that give customers buying transactional data, digital tools bring customers emotive elements that are insightful about their overall experience. Today’s analytics platforms offer key behaviors that guide the company’s marketing efforts.

Employee experience holds the key.

Correlation studies show how businesses profit when employees’ experiences are given high priority. A happy staff person is a pleasure to interact with. Customers feel a brand positively when passionate employees service them.

Recommendation engines for personal experiences 

As companies learn from Amazon and Netflix how to use their touchpoints to offer product and service recommendations, recommendation engines’ popularity grows. The user data personalizes CX and increases customer spend values perceptibly.

Relationship building before sales and profits

Building customer relationships is one way to simplify the CX complexities (technology and processes). Investments in staff training for capturing customer details and situations to make customers feel special is a definite way to build trust.

Mixed Reality UX

Learning from metaverse-inclined tech giants who create immersive mixed-reality experiences is the next step in the curve. While big data analytics offers savvy UX choices, the differentiation for organizations comes from their ability to amplify the stickiness quotient across the engagement cycle.

After-sales data and processes

The one area where the potential to gain CX points exists is the post-sale touchpoints. While customer acquisition gets full attention from the sales teams, the work begins by examining data after checkout. A follow-up plan that seeks and addresses frictions is crucial to expanding a customer’s lifetime value.

Mining data for anticipating customer needs. 

It is surprising to note that up to half of the customer data is not analyzed or leveraged in ways that unlock customer behavior patterns that can be used to provide the best possible CX strategy. While advanced analytics is needed for data discovery that picks out use cases, it begins with a strong organizational commitment to improving CX.


Staying in step with today’s disruptive forces, businesses must use technology creatively and use CX as a strong barometer (along with profits and shareholder prices) to guide their overall growth strategy.

In the final analysis, becoming customer intelligent will come when companies cultivate an insight competence by combining data lakes, appropriate data science architecture, and exploiting next-generation intelligence (AI and ML).


How does Omnichannel Banking Experience Improve CX?

How does Omnichannel Banking Experience Improve CX?

Millennials and Gen Z are today the largest generational demographics in the US, and other regions will soon follow suit. Most consumer-facing industries are elevating (and rewiring ) their systems to respond to the ‘Digital-as-default’ environment. Financial institutions must adopt innovative approaches to woo the younger clientele by developing nuanced offerings that match their habits, expectations, and preferences.  

Will banks have it easy with the Touchscreen Generation?

Bringing in technology will allow the banks to answer the question partly. However, the longer-term answer is not straightforward. Authentic digital experiences (and not features alone) will be a differentiator. Second, along with technology, banking has to become more “human .” How? Banks must realize that tomorrow’s customers are reshaping the finance industry from gamification to meaningful content, accountability to service, and community engagement.

Omni Channel Banking Platform

Given the changing business (and social) landscape, here is how the Omnichannel banking experiences are critical to a bank’s growth potential. 

Leveraging the in-market forces

Omnichannel banking experiences are a natural outcome of today’s market trends. The pandemic forced companies to turn agile, experiment more with AI and Robotic automation (and other cognitive capabilities), and tackle the distributed workplaces (accelerated because of the lockdowns). All these in-market forces compelled financial institutions to turn to the right-channeling – the primary reason behind omnichannel (meeting customers where they are and influencing them through the appropriate channel).

Increase in customer choice and flexibility by numbers 

First, a few statistics. Prominent studies point out that the pandemic has changed customer preferences – 76% now prefer online banking, 46% (up from 15%) are comfortable with video call advisory, and 59% expect on-demand, anywhere, anytime banking services. 50% of High-Net-Worth Individuals under the age of 40 will purely choose virtual advice (compared to 39% overall). The strongest endorsement for omnichannel banking experience comes from the fact reported by Digital banks in the UK: digital banks’ net promoter score (NPS) is 3X that of traditional banks.

Keeping Pace with Digital Evolution

Omnichannel Banking Experiences work best when banks realize they are keeping pace with constant digital evolution. Collecting data from diverse sources (geolocation info, social media feeds, wearable tech, browsing, in-store data, etc.) and then using this to analyze and design a touchpoint strategy to maximize acquisition is the start point for the Omnichannel banking strategy. After that, Banks must transfer customer interactions from physical branches to digital channels by supplemental value. The third step is about delivering a personalized, proactive, and customer-centric experience based on consumer behavior.

The Omnichannel Banking Experience relies on its robust Implementation

By mapping CX journeys and measuring customer traffic, banks must create transparency around user behavior. Next, as optimal online CX journeys are set up (with functional and superior product/landing pages), the bank’s Omnichannel mechanisms show successful outcomes – higher online purchases, easier decision making, and conversion. Banks (and companies) fail digitally when their customers’ real needs and preferences are not captured in omnichannel journeys.

Culture changes needed for Omnichannel Banking

For banks, intent on designing and implementing best-in-class omnichannel services is easier said than done. In a mixed digital-savviness environment (Digital by Lifestyle Vs. by need Vs. choice Vs. offline population), managers and bank employees must embrace new standards of customer orientation. These new standards encompass the principles of agility, transparency, and flexibility. The mindset shift that is high on creative problem solving and continuous improvement is the next step. A meaningful performance measurement system should finally support the culture that best supports the omnichannel banking experience.


Driving a customer-first omnichannel experience in an age when new channels surface every other day is a complex task. To ensure that improvements address customer needs will happen when banks and Fintechs place the customer in the center of their ecosystem. With each passing day, customers will become more tech-savvy, so banks must rise to the challenge by elevating the quality standards of their systems and live agent interactions. This mindset will help them achieve the seamless omnichannel service that separates them from the competition.