A Digital Banking Strategy For Next Decade

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With digital banking adoption continuing to grow, branch traffic dropping and digital devices proliferating, the current approach is unsustainable for most institutions. That is why the results from the 2015 KPMG Banking Outlook Survey held few surprises. The study indicates that 46 percent of the banks that participated will increase their technology spending the coming year. In addition, nearly 40 percent of the bank executives said they plan to make “significant” investments in IT related to online and mobile banking over the next one to three years.

Where that money is invested will be the difference between perpetuating the current tactical approach and establishing a strategic plan that can serve the institution for the next five to 10 years. Key indicators of a sustainable business model that will provide customers and members with the digital experience they demand include:

  • Solutions that offer a single code base for digital banking and its many associated services, such as personal financial management;

  • Highly configurable products that do not require financial institutions to contract with the supplier (and pay additional fees) each time a simple change in the disclaimer or branding scheme is required; and

  • Solutions that offer data analytics as a core feature, and allow the bank or credit union to “own” its data. Then, financial institutions can accumulate, categorize and segment information about their digital banking customers and members and use that data to deliver personalized, value-added services to them.

How do you know if your financial institution is on the right track? The number of online users at your bank or credit union should be growing by at least 3 percent annually. Your mobile users should number no less than 30 percent of the online total. If this is not the case, there is often a problem somewhere: e.g., the user interface, application design, user awareness or technology effectiveness.   If you decide to make a change, first go to the C-suite. Executives must understand and be actively supportive of any effort related to transforming a financial institution’s digital banking landscape. Gaining that support may not be as hard as many suspect, given that the C-suite is in the best position to understand the positive impact a modern digital banking solution can have on the institution’s performance.

Most financial institutions must reevaluate their approach to digital banking sooner rather than later. Rather than continuing to apply Band-Aids to the existing disparate channels and services already in place, they must step back and consider what their options offer for building a five- to 10-year strategy that will address consumer digital demand, while delivering on the promise of lower fixed costs and better efficiency ratios. Business as usual will only assure that your bank or credit union is at a competitive disadvantage in the marketplace for the rest of its existence – which may be very short.

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