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Things You Must Know About Retail Banking Digital Transformation

Things You Must Know About Retail Banking Digital Transformation

The implementation of digital technologies to maximize the value of digital technologies is referred as digital transformation. The four main aspects of digital transformation are Customer satisfaction (CX), Data & Analytics, Cloud Computing, and Mobility. When it comes to digital transformation, the entire organization must adopt a new mindset to accomplish the planned benefits. Employing teams proficient with technology is not enough; there is a need for an outside-in thinking that comes from domain specialists like Maveric Systems.

Delivering a better customer experience needs a deeper understanding of customer expectations and challenges. This insight layer comes from advanced analytics that banks and FIs are increasingly investing in. Especially with the proliferation of 5G technology and smart devices, legacy banks are embracing omni channel banking practices.

What does the transition from conventional to digital platforms look like? The blog covers the pertinent aspects for digital transformation when it comes to retail banking.

Banks must implement improvements to improve customer experience.

Technology improvements are affecting consumer expectations and behaviour. More than half (53%) of financial institution customers have switched to different primary financial providers, and a further 9% said they are thinking about doing so. The findings come from an Everfi Report. The conclusion? If banks want to keep their current clients, they must give them what they want.

Customers anticipate FIs to be accessible 24/7. As per a recent Deloitte survey, customers were using digital banking channels including internet and mobile apps more frequently even before the pandemic. As more customers started utilizing digital channels during the epidemic, this trend grew more pronounced. Needless to say, FIs must invest more in digital solutions as the use of digital channels rises.

Digital Transformation in Banking

Four Key Technologies Used for Digital Transformation in Retail Banking

  1. Digitization

Digitization is the first step in digital transformation. A business that primarily uses branches to serve consumers must first improve its sub optimal mobile and web banking offerings. Companies in the financial services industry should adopt cutting-edge technology rather than outdated technology as they digitize. Although iterative progress has customers thrilled, it is irrational to not use the most advanced, mature technology in the digital transition. 

  1. Automation

A McKinsey study says, 20% of corporate activities can be automated with current technology. Robotic Process Automation can assist enterprises because it eliminates human error, procedures should be made more efficient. It also reduces operating costs by reducing the staff and concentrating on more crucial, decision-intensive tasks. Then there process mining technologies that are used to find opportunities for process improvement.  

  1. Machine learning and advanced analytics

Data analysis can give insights about consumer behaviour, enabling banks to enhance the customer service they offer. Personalization is one frequent analytics application in the banking industry. Any banking product must first be promoted to the appropriate customers. By doing so, FIs can reach out to the appropriate consumer at the right time with the right message and offer through the right channel by utilizing advanced analytics. 

  1. Blockchain

Blockchain is increasingly being used across the retail banking industry. From investment management, international trade, trade finance, and capital markets, this new trend is catching on speed. One reason is that it decreases the need for intermediate banks by reducing costs, increasing transaction speed, providing transparency, and reducing fraud.

 Conclusion

The banking sector is changing quickly in the modern era. In addition to a difficult macroeconomic environment, banks must deal with constantly changing client behaviours and raised expectations in a world that is becoming more and more digital.

Through cutting down on friction in industry value chains, fostering innovative ecosystems, and adopting innovative business strategies, new kinds of competitors are catering to these demands. At the same time, the landscape of financial services continues to be impacted by the continuing explosion of data, increased compliance requirements, expanding security threats, and shifting worker demographics. Financial institutions must be adaptable enough to foresee change and thrive in it.

About Maveric

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

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Digital Transformation in Retail Banking: Defining Creativity, Management, and Partnerships

Digital Transformation in Retail Banking: Defining Creativity, Management, and Partnerships

What prevents banks from embracing the digital trend for retail banking? Indeed, cybersecurity and data privacy threats are among the top worries, followed by the prohibitive costs and complexity that technology poses. However, as with any shift, the digital revolution in banking necessitates a solid, all-encompassing strategy.

If Digital transformation is the primary objective to redefine creativity, management, and partnerships, then there are three crucial approach pathways:

  1. Redesigning the client experience
  2. Building a solid partner ecosystem
  3. Investments in emerging technologies

Let’s start with the requirement of redefining client management and partnerships. Incumbent banks will do well in this regard from what the neo-banks mainly do: Freed from legacy systems, neo-banks rely on lean business models to offer innovative features for friction-less services that power access to specialized market bases.

Creativity in Operating Models and Business Strategy for Retail Banks

As strategic partnerships with leading banking technology providers such as Maveric systems bears out,  digital transformation is about both the operational and cultural movements toward integrating digital technologies across all banking functions of the bank.

Creativity becomes indispensable when FIs are mandated to maximize customer value and bring an edge to compete in a saturated market. While technology is the foundation of digital transformation, banks must implement their digital strategies creatively to do more with less. After all, many digital transformations fall short because technology is the only factor considered. Crucial on the implementation checklist are addressing the cultural barriers and the change management needed.

Digital Transformation in Retail Banking[6696]

Driving creativity, partnerships, and management in Retail Banks – What are the success markers?

The advice for retail banks can be summed in a single phrase – operate like a technology company. Breaking it down for actionable insights,

  1. Employ data to enhance personalization and consumer engagement.
  2. Choose technology stacks that lower expenses and accelerate innovation ability.
  3. Adopting a flexible operational approach that adapts to rapidly evolving markets

Conclusion

Although the banking industry has historically resisted change, the pandemic’s potential effects and the severe competition from Fin-techs drove banks to speed up their digital transformation. Banks have many opportunities to profit from digital adoption, including increased consumer convenience, process optimization, and efficiency gains. To access these values, several of the most prominent banking institutions in the world have already embraced enterprise software development.

 About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric Systems accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric Systems teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

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Retail banking digital transformation – Choosing a digital platform.

Retail banking digital transformation – Choosing a digital platform.

Today’s uncertain economic climate has little tolerance or margin for underperformance. Banking faces severe tests. From knowing where to find and make profits to protecting and expanding strategic revenue streams, success in today’s evolving markets mandates that FIs must define and deliver value propositions that can win in the digital age.

Given the spirited forays of BigTechs and Fintechs, Retail banking institutions should discard older playbooks. The incumbents will do well to operate more like the Tech companies – advance their data capabilities, employ next-gen tech stack and embrace agile operating models.

The retail banking digital transformation will neither be a simple nor a quick fix. For one, a profound examination of consumer expectations is a first step, followed by shifting incumbent banks’ scale advantages in their branches to commit to innovations.

How should Retail Banks prepare for tomorrow’s customers?

Retail banks must reconfigure their value propositions to simplify and enrich the customer experience and create value. To do that, they need to choose digital platforms basis their capital investment appetite and the competitive landscape in which they operate. Three digital platforms support the entire value chain.

  1. Daily banking platforms offer frictionless access to diverse retailers and service providers.
  2. Complex lending platforms that support end-to-end ecosystem partnerships for life events and non-daily events.
  3. Wealth and asset management services platforms offer hyper-personalized advisory support that helps investors increase and protect wealth across lifetimes.

Partner or a Vendor?

Digital banking platforms (DBPs) implement next-generation tech stacks to enhance self-service customer journeys and give customers increased decision-making powers. However, for DBPs ranging from development platforms/ toolkits that would enable banks to develop their services to highly packaged off-the-shelf services, the landscape ranges from global and local players and industry-specific backgrounds such as payment processing and core banking.

But more than a vendor, a digital transformation partner like Maveric is crucial to keep pace with the rapid rate of change and to employ new products and services quickly and effectively.

Digital banking platforms

Since the increase in mobile banking, DBPs have evolved to manage the whole customer lifecycle. Leading banks favor the interaction and customer engagement elements over transaction-centric services as part of their overall broader omnichannel strategy. Here are a few functionality-driven DBPs.

Online banking: Internet-based access portal for basic banking functionality (e.g., account information and payment transfers)

Mobile banking: Including SMS, WAP, smartphones, and tablets with the same functionality as online banking, as well as biometric and facial-recognition technology.

  1. Origination/onboarding: Supporting direct digital applications and automated client onboarding
  2. Customer engagement: Independently access, manage and customize end users’ account information.
  3. Employee engagement: Banking personnel communicates with the client on the digital banking platform via devices to improve the customer experience.
  4. Digital marketing and customer communication: In-application marketing alerts, banner adverts, and targeted marketing message support.
  5. Analytics: Track individual customer journeys across multiple devices and channels.
  6. Multichannel management and integration: Omnichannel experience within the digital channels, contact center, ATM, kiosk, and the branch and integrate new digital channels as required

Choosing a Digital Platform

  1. Flexible system for dynamic product and service innovations.
  2. A system that creates and launches new banking services with superior speeds.
  3. Offers omnichannel banking interfaced seamlessly with multiple platforms.
  4. Holistic client-tailored data repositories and dashboards.
  5. Compliant across industry regulations and minimized operational risks.
  6. Employs control and corporate governance tools to identify and rectify transactional issues.

Conclusion

To compete with technology companies, banks must use comprehensive data infrastructure to support data collection, storage, advanced analytics, and a digital marketing engine to translate analytical insights. Moreover, retail banking business models require an IT infrastructure that handles demand variations and processing capacities to deliver new solutions through faster turnaround times.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

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Challenges in the Retail Banking Industry 2022

Challenges in the Retail Banking Industry 2022

Retail banking is at crossroads given the tectonic technology forces and the altered consumer behaviors post-pandemic. Before the year is up, expect leading retail banks to do more of the following.

  • Realigning their technology investments to enhance omnichannel and hyper-personalized customer offerings.
  • Increase cross-selling and up-selling to existing customers and focus on retention equally to customer acquisition.
  • Increase customer deposits rather than play the “rate” game.
  • Elevate their digital marketing efforts across social media and user-generated content.
  • Clear obstacles that prevent ecosystem partnerships, including Fintechs.

What does the future look like?

Even though strict regulations and new technologies continue to affect the Retail Banking industry, it may be that the biggest challenge for the industry is to keep up with customers’ fast-changing needs. Today, banks have a new type of customer: one who expects the same level of customer service from both banking and non-banking industries as he would from new digital consumer platforms.

Top challenges in the retail banking industry

Putting the customer back into the center.

A customer’s relationship with a bank has many crucial touch points where decisions need to be made, such as when the customer first signs up or when a problem needs to be fixed. Four customers rely on their Relationship Managers (RMs) and Customer Service Managers (CSMs) to research and choose the right products. With the advent of self-service channels, banks must reclaim their legacy customer “touch” by building a ‘Customer Centricity’ culture. While 75% of the largest retail biggest banks claim to be taking proactive steps in that direction, many others are yet to start.

Where is the ‘human’ in personalized service?

Every traditional retail bank finds it tough to offer customers a unique and personalized experience. When it comes to online banking, this is even harder to do. Most banking apps have a standard interface that doesn’t respond to specific questions. Also, the rise of Virtual RMs (VRMs) has given consumers another reason to be annoyed since they get calls from VRMs when they don’t need help. VRMs often don’t get to know the customer well enough or keep the call going long enough to find out what they need or how well they know the customer’s banking history.

The ‘old’ obstructs the ‘new.’

Most banking departments, specifically the marketers, can’t get the information they need to send targeted marketing messages. The data is stored in old systems, which makes it hard for different departments to share information. These old systems weren’t made for the digital marketing world of today. Banks need to put money into new IT systems so that marketers can get a 360-degree picture of their customers – behaviors, life situation, risk tolerance, and prior investment or financial history.

The competition only grows.

Along with the above, the past years have seen exponential competition – Fintechs, challenger banks, and neo banks – pressuring legacy FIs to change their traditional processes and platforms. As start-ups proliferate with niche products and seamless CX, incumbents are left with few options other than to embrace digital transformations that may not be well thought through or in line with business vision. This can prove to be a formidable challenge down the road.

 

Vital questions for the future

Given the described challenges retail banks face in 2022, the questions below offer a quick way to map out the concerns.

  • Is the bank’s business model centered on the customer?
  • Are the ways business is done today hard to understand?
  • Is the technology used outmoded? Or does it predict customer problems before they occur?
  • Where is the ‘human’ experience in retail banking? Is it face-to-face or stuck up behind processes and platforms?
  • Are customers getting enough value for their investments and efforts? Are they interested enough?
  • Are there proactive ways to prevent cybercrime, and are these deterrent actions known to customers?
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Top Insights for Retail Banking Industry

Top Insights for Retail Banking Industry

What does the current landscape look like for Retail Banking?

Firstly, the post-pandemic retail banking industry is moving out of a climate of muted financial performance. Secondly, with common enablers of open hybrid or multi-cloud solutions, banks embrace Data & AI tech to combat security and fraud risks.

So far, breaking away from the pack signifies the next normal for the retail banking industry. And why is that? Now with most COVID protocols behind us, the urgency for retail FIs to accelerate digital transformation is driven by the sustained competition coming from Fintechs (Refer to infographic)

 

Here is a roundup of the Top Four Insights for the Retail Banking Industry

Tomorrow’s Competitive Advantage will come from Customization.

As part of their digital transformation journeys, top retail banks must invest significantly in high-tech analytics to improve Customization. Micro-segmentation of consumers through customer relationship management (CRM) data (such as socio-demographics, client strengths and product usage, and recent transactions) and digital behavior will be the integral aspects of digitally- agile sales programs.

From adopting various processes – increasing sub-segments in customer profiling, working through test-and-learn strategies, personalizing communications with each customer (altering the email subject line, tweaking the language tone, optimizing communications for the time of the day), and constructing a multichannel contact tree are mechanisms that will boost customer centricity.

Retail Banking’s next battleground is Digital Sales.

Successful FIs have figured out how to address more, and higher-value client needs digitally. Even though the global crisis slowed monthly unit sales across channels in many markets, it did accelerate the redistribution of the sales mix as channels recovered at different rates.

Leading retail banks are accomplishing top-tier digital sales by continuously developing the digital customer experience and optimizing it across the customer journey.

Here are a few optimization examples from CX journeys

  • Deploying and testing new features
  • Using customer relationship management (CRM) software to make preapproved offers
  • Shortening the application and approval process by pre-filling information
  • Employing digital signatures to speed up the fulfillment process.

To quickly digitize multiple priority customer journeys, more and more banks are establishing a digital “factory” – bringing together hundreds of staff to build new, best-in-class digital experiences and products.

Upping the ante in Retail Banking through Digital Services

Banks have helped clients feel secure using digital and telephone banking during COVID-19. They have therefore enabled the next generation of digital services. As of May 2020, people have shown great satisfaction with digital channels, and anywhere from 60% to 85% of consumers in Western Europe, including those aged 65 and up, prefer to utilize digital for everyday transactions.

Successful banking businesses have reported that increasing their mobile strategies has resulted in five times the engagement. Almost a third of all digital purchases today come from the mobile app. Several factors, including more exciting app features, frictionless user experience, and creative capabilities, are all responsible for this surge.

The infographic below traces the shifts in banking business models. The rate at which it evolves across various geographics is different and determined by regional influences.

Amping up the “human” in virtual channels.

To improve customer service through the call funnel, leading retail banks invest in cutting-edge Data & Analytics technology. Using chatbots to keep digital customers has helped reduce customer service calls. Conversational and adaptive IVRs today draw on a wealth of interaction history to deliver targeted answers to individual users’ questions while freeing up agents’ time to focus on more complex cases. When calls get through to agents, innovative tools like voice-to-text transcription create data sets that can be mined for insights using text analytics, sentiment analysis, and natural language processing.

It’s no secret that several financial institutions have dabbled in remote advice models like branch-to-hub or hub-to-home banking. Through screen sharing, remote advisory can mimic the benefits of face-to-face meetings and digital capabilities, such as identification for quick fulfillment and a more gratifying experience. Ultimately, these features link clients with the most qualified specialists for their inquiries, allowing for more productive dialogues.

Conclusion

In sum, there are two crucial questions retail banks must address before drawing up their next growth strategy:

  • How likely are banks and other FIs to see digital channels overtaking physical locations as the primary means of selling their products and services?
  • After the pandemic, do banks expect a reversion in customer behavior to pre-outbreak norms?

Answers to these two questions will prove crucial in the final analysis.

In 2022 and the following year, expect to see more retail banks reevaluating their revenue drivers, searching for new product launch prospects, and reorienting their offerings towards an advisory and insurance slant.

For retail banks, with escalating revenue and growth pressures, it is advisable to employ advanced analytics that identifies relevant growth niches so that optimized digital sales journeys and innovative marketing approaches can fuel growth.

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