Much has been written about digital segmentation for financial institutions, with terms like "leaders" and "laggards" bandied about. At Fiserv we generally position financial institutions into one of four digital segments representing varied levels of emphasis on digital banking as part of their overall strategy. Although an organization's size can influence which segment they fall into, it's their aspirational goals that define them. For many organizations, meeting those goals entails a move up to the next level on the digital banking spectrum.
Knowing the attributes of each segment can help you determine where your financial institution currently fits on the spectrum, and if your institution is ready to increase its focus on this area. Where you want to arrive is for you to decide.
Digital is at the center of the business strategy for these financial institutions. Digital is a key driver to differentiate themselves from their competitors and they truly believe the future of banking relies on digitally acquiring and servicing customers. They leverage digital to dramatically reduce operational costs, which then helps them fund even more digital innovation. Digital innovators leverage digital to create an omnichannel experience that cost-effectively maximizes customer touchpoints, drives more valuable digital engagements and improves the level of the institution's relationship with customers.
This segment relies on customized solutions for their users. They are motivated to acquire best-of-breed solutions to better serve customers and increase digital engagement. A Fiserv study of mobile banking users found specific returns on the mobile investment related to product usage, transaction frequency, attrition rates and revenue generated.
Digital differentiation is a key strategic priority for these financial institutions. They actively look for opportunities to deliver advanced digital capabilities to their customers, and embrace digital banking innovation for revenue growth and success. These organizations view digital as a differentiator in their market and focus on aggressively migrating services and transactions to the more cost-efficient digital channel. They strive to deliver a consistent cross-channel user experience to increase lifetime customer value and retention. The ability to customize the digital solution is vital for these financial institutions to serve their tech-savvy customers and keep pace with competitors of all types.
Digital capabilities are important to these financial institutions, but as a complement to their relationship-based physical channels. Financial institutions in this segment are interested in proven tools and self-servicing to better drive the digital customer experience. These financial institutions seek a best-of-breed solution from a proven partner that exceeds industry standards.
Financial institutions in this segment generally view digital banking as part of their strategy, but not necessarily a top priority. They may be focused on other initiatives to drive key financial metrics and don't see digital as a differentiating requirement of the business plan. They see digital as an essential capability required by customers who expect basic functionality, online balance checks and transfers, for example. They rely on more traditional servicing channels to differentiate their institution versus digital. These financial institutions are looking for an affordable and turnkey digital channels solution with support from their primary vendor partner.
Where is your financial institution? More importantly, where do you want to be? Financial institutions require a digital solution portfolio that matches their digital aspirations, which for many organizations entails a move up to the next level. However, it's important to underscore that not all digital banking strategies are the same and striving to be a digital leader will not make sense for every financial institution.
If you do wish to up your game and move up to the next level of digital banking, there's a path to get you there when you're ready. Your digital destination is up to you as you define and deliver a strategy that's right for your financial institution.
In my next blog on The Point, the focus will be on how value is created for each segment.