10 Steps to Starting a Digital Banking Transformation

Finding the perfect blend of people, processes and technology

Most financial institutions understand the power of digital. The more pressing question, though, is how an organization brings all the components together to turn digital transformation into reality. 

Digital transformation can alter business activities, processes, competencies and models to leverage technologies in a strategic and prioritized way. Even though financial institutions see the value of digital transformation, finding the necessary digital and leadership capabilities can be a struggle.

So how do you get started? Look at transformation as a journey. It starts with figuring out where you want to go and how you're going to get there.

For the financial institutions that are ready to start down that path, here are the first 10 steps to take.

When looking at your product offerings in comparison to those of your competitors, consider:

• The quality of your website
• The ways you educate consumers
• The quality of your product packaging

Your goal is to create a comprehensive report card of how your financial institution stacks up against traditional and nontraditional competitors in terms of digital services.

3. Assess Processes

Do your processes support digital account opening? Is it a multichannel experience that can be started online and finished in-branch or through the call center? Do you have a process for monitoring app store ratings and other social media channels for consumer feedback?

When deciding how to transform your processes, think about:

• Multichannel experiences
• Branch servicing
• App store feedback
• Optimizing available digital services

The goal is to develop a comprehensive list of processes to be included in your transformation, based on time and budget constraints.

4. Evaluate Culture and Willingness to Adapt

Change is difficult. As you look at digital transformation, is your board of directors and your leadership supportive of the change? Are they driving it or is it grassroots? If you were designing your transformation for a digitally optimized organization, how would you structure it?

When evaluating your company and gauging its ability to evolve digitally, consider:

• Whether your company's culture can adapt
• If your leadership backs the change
• What the organizational structure would be

You want to create an environment in which leaders are aligned, accountable and action-oriented.

5. Analyze Talent and Recruiting

An internal training program, or a recruiting strategy for that matter, looks very different for a digital native than it does for a Gen Xer or an employee close to retirement. Do you have digital experts in your branches and departments to be the go-to for internal staff, or even customers and members, who may not be as comfortable with digital technology?

When analyzing your talent strategies, consider:

• Your recruiting program
• Internal training programs
• Employee digital aptitude
• Implementing digital experts

You want an employee attraction and retention program that aligns with what your financial institution seeks to achieve from digital transformation.

6. Inventory Systems and Products

How often do you assess your products? Are there capabilities that you haven't taken advantage of? Do you have annual product planning activities that align with your budget and strategic plan?

When assessing your systems and products, focus on:

• How to make the most of what you have
• What you want to introduce to enhance your digital capabilities

Your goal is to have a detailed inventory of your current capabilities and a roadmap for how to achieve your objectives for a digital transformation.

7. Define Customer and Member Segmentation

Is customer or member data aggregation a struggle? Do you segment your consumers by demographics, lifecycle or product mix? How do you see your digital services aligning with your customer segments and preferences?

While defining your segmentation strategy, look closely at:

• Product mix, wallet share and profitability
• Digital services offerings
• Growth levers
• Customer and member data aggregation

The goal is to have a program that defines how to predict which consumers are more likely to have and add digital services.

8. Consider Your Communication and Marketing Plans

Do you have a strong internal and external communications program around your digital transformation? Have you identified the decision makers, those who simply want progress reports and those who may want to weigh in on areas of interest to their team or department? Are you building enthusiasm around the transformation?

When devising your communications plan, take into account:

• The four key attributes that help clarify and define project roles: responsible, accountable, consulted and informed
• Your communication approach to consumers
• The best ways to build momentum and enthusiasm

Your goal is twofold: Develop an internal communications plan that clearly defines who needs to know what, and create a marketing plan that outlines what your consumers should expect when interacting with your financial institution. 

9. Conduct a Risk Assessment

Are you working with your audit and compliance partners to help your digital transformation stay on track? Have you leveraged their knowledge in areas such as automating manual processes?

Your risk assessment can cover topics such as:

• Pending regulatory activities
• Regulator engagement
• Partner and vendor evaluations
• Risk and compliance team engagement

A comprehensive risk assessment will reflect potential areas of concern or focus within your digital transformation.

10. Prioritize

Are you taking a practical and realistic approach and communicating that pragmatism to your key stakeholders? Are you keeping in mind that you can reap the benefits of digital transformation with a few strategic initiatives that you can build on later?  

When strategizing for your digital transformation, try to:

• Identify quick wins
• Consider other initiatives contending for resources
• Avoid tackling everything at once

You will want a prioritized list of tactics that enable your institution to make incremental progress toward a broader digital transformation.

Bring it All Together

Once you establish your 10-step digital transformation framework, it's time to bring it all together.

As you do that, keep in mind that while digital data, technology and processes are foundational to a successful transformation, your people are just as important. When you implement a common methodology to access and manage information, the people in your organization can provide insights and intelligence that lead to empowered decision making across the entire enterprise.