Not so long ago, digital transformation in Banking meant keeping pace throughout the third industrial revolution; meeting the digital challenge by providing basic online banking functionality that supported bricks and mortar mainstream branches.

As digital evolved, account and loan applications were added, along with mobile transactional functionality to allow people to bank on-the-go. Personalisation and big data made its way into Board and Executive strategy conversations. The Retail Banking sector rose to the digital challenge, proving itself agile and adaptable to change, despite the unchartered territory of balancing strict risk and compliance controls alongside the necessary digitalisation of the customer experience.

As we enter the fourth industrial revolution, digital transformation has become a lot more meaningful and immersive than providing online and mobile transactional functionality. Corporate and Commercial Bankers now find their marketplace in an accelerated state of change, alongside Retail Banking and the wider Financial Services sector. AI in banking and financial services is revolutionising the industry. FinTech, InsureTech, RoboAdvice and open banking capabilities are shifting the goalposts, stealing market share from incumbent banks, building societies, credit unions, insurers et al, and doing so with a side order of brand sass that appeals to younger audiences, almost as much as their instant gratification banking services do.

How sound is your organisation’s digital strategy?

A recent report by the Boston Consulting Group highlights that executives in the Banking sector lack confidence in their organisation’s digital futureproofing. With Big Tech and FinTech threats looming, over 40% of c-suite executives in banking reported that their own organisation did not have a digital strategy – never mind a sound one – despite 80% of respondents being aware that digital is leading transformation in the sector. Only 20% of banking executives believe that their bank has a market-leading digital presence, with the number one barrier to effective digital transformation cited as dated infrastructure and challenging legacy systems. Yet legacy IT needn’t hold you back as you map out future transformation and it does not mean you need to rip out and replace high value tech to get started. The power of Microsoft Dynamics is that you can integrate legacy data sources right into the solution for quick results, now.

The four pillars of digital transformation in Banking and Financial Services

So, it is clear that the opportunity to thrive, not only survive still exists for hungry market players with an eye on innovation. Boston Consulting Group recommend four key pillars for effective digital strategy in Banking and Financial Services. These key priorities align with Microsoft’s four pillars of effective digital transformation and provide a cohesive starting point for reviewing and renewing your digital business strategy, market position and current capabilities. End-to-end customer-focused journeys and increased satisfaction through the latest technologies in the Microsoft stack; from a safe and secure cloud-based Dynamics 365 CRM that unifies your people, data and business processes in a single, intelligent system, to AI for customer services and sales integrations that automate processes and decision making. All driven by sound data and providing enhanced operational workflows for every single person in your business.

Why is it so important to reach digital maturity in Banking and Financial services now? New technologies are always emerging, however, only digitally enabled organisations with the right foundational solutions in place will be able to make use of these new innovations. The beauty of Dynamics 365 cloud platform is that once implemented, it is always updating. Meaning you are always working on the latest version and able to access new release tools as soon as they hit the market. Recent releases include live chat and SMS functionality and new Power Platform capabilities which combine Power Automate, Power BI and Common Data for apps which allow an easy and powerful collaborative integration into Dynamics 365 and Office 365.

Of course, these operational changes and strategic digital improvement cannot and should not be disconnected à la carte projects and initiatives undertaken in a silo. Successful digital transformation is a unified and coordinated business project, created in the boardroom as a comprehensive, enterprise-wide strategy,  implemented with a defined purpose, and an industry expert and experienced external partner like Telefónica Tech supporting the process.

The four key priorities for effective digital transformation in Banking

1. Reinvent the consumer journey

The outdated banking model is dead. Customer expectations continue to rise, desiring and demanding service and personalised sales processes their way. Seamless, safe and secure fingerprint or facial recognition log in, one-click withdrawals, remembering personal preferences at every customer touchpoint and Alexa voice integrations are the bare minimum that customers expect when they interact with their bank today. Market disrupting challengers and nimble, born-in-the-cloud FinTechs have evolved the customer journey and traditional banks, building societies and insurers should do the same to remain competitive.

Cloud-based CRM is one of the most vital tools in the innovative banker’s arsenal. Gain a single view of customers and prospects with Dynamics 365, your entire business in one neat, expandable solution. With all customer data in the one place, available to your cross-departmental agents in real time, you can exceed and delight customers with insights that sell, service and convert. Seamlessly merged with big data, business intelligence and AI integrations, your agents can pick the next best action, systems are immediately updated, and your customer gets the service they have come to expect from Big Data players like Amazon, Apple et al.

Before kick-starting any digital transformation project, spend time selecting the right partner and mapping the customer journey together to put your customers at the centre of your business. The beauty of Microsoft’s cloud technologies is that they can be moulded and integrated to suit your bespoke needs, reimagining and redefining your customers experiences. When you understand what matters most to different subsets of customers during critical junctures in their user journey – supported by the immense capabilities of the Microsoft stack – you can build user experiences that reward, engage and create long-term loyalty. On-board a client in a few clicks with Adobe Sign. Automate lending decisions with Power Automate. PowerApps and Portals connect access to Credit Reference Agencies third party tools. The limitations are endless, with a quantifiable ROI evidenced from the outset.

2. Discover the power of data

Why harvesting data if you do not harness its power? Microsoft Dynamics and Power BI reporting provide insights that help you understand your clients and prospects, uncover missed opportunities, identify high-ticket clients or cross-selling opportunities and reduce the cost of acquisition, satisfaction and retention too. Dynamics online and Power BI allow your team to create, share and view immersive visual dashboards on the go, within global geographies and are key drivers of building consultative client relationships that last.

During a recent Dynamics 365 implementation within the small business banking division at Virgin Money, unifying data from legacy systems allowed Relationship Managers and Team Managers to deepen customer relationships, identify key accounts and identify those at risk of default or depreciation. Data precision and clarity allowed the team to gain 3,175 days in increased productivity through increased data analytics and an 11 x increase on customer outreach calls, with impressive impact on annual results too.

3. Redefine the operating model

Living in an increasingly time-poor world, consumer needs have shifted in their banking relationships. That close relationship with the bank manager has become a convenient online digital relationship that is accessible via their devices as and when they need it, outreaching for that human touch only when they have more complex needs. Hybrid sales, customer service and experience operating models that are well executed can inspire loyalty and delight a customer. Executed badly, can frustrate and have them abandon ship for a competitor without even stopping to let you know where you have failed.

Banks who successfully combine the human touch with self-service capabilities via AI bots and custom-built portals can expect to see up to a 15% increase in revenue and satisfaction levels and up to a 35% saving in branch network costs. Utilising bionic networks, whilst being open to collaboration with other FinTechs and Open Banking players can create the high value service levels that your customers desire and create seamless services that deliver on brand promise and value.

4. Build a digital driven organisation

The final priority of successful digital transformation in banking is facing organisational culture hurdles face on to build a digital-first business.

When you set out strategically, with board, CEO and senior executives aligned on a vision to build a digitally driven banking business, you reaffirm to your customers, your people and your stakeholders that digital transformation is a priority. You state that every action in the future roadmap leads to agile and digital-first working methods, earmark funding and help recruit the best talent and partners in the sector to make your vision a reality. It takes collective vision to shift a traditional financial provider mindset into a radically changed innovative digital culture. Strong top-down leadership is vital to make success happen, with the right partner steering your vision every step of the way.

The boldest incumbents and challenger banks are taking cue from FinTechs, mirroring their agility and born-in-the-cloud best practice to overcome legacy challenges and red-tape laden showstoppers that dampen customer experiences.

Data driven customer experiences, with a human touch

Digital transformation in banking today is connected, blending people, culture and technology to provide personalised service, slick and connected operations that service the customer how they want, when they want and where they want it. It is speedy and agile, data-driven, with a human touch. Banking executives and the c-suite are under tremendous pressure to keep up and ensure a coherent digital strategy delivers on corporate vision. For more information on improving customer experience and gaining competitive advantage in Banking, get in touch with us.