Customer experience, mobility and new business models based on leading fintech startups all form part of a process that many financial institutions are carrying out and these are the seven steps that they should follow in order to achieve success.
Roberto Ferrari, General Manager of CheBanca!, has performed an analysis in The Financial Brand by adapting the book The 7 Habits of Highly Effective People by Stephen R. Covey to the digital transformation being experienced by the banking world at the present time.
Here are the seven features that a bank must endeavor to fulfil in this process to make it a success:
1. Customer – focused strategy
Achieving a better customer experience should be the main premise of each digital transformation strategy. This is what will achieve the long-awaited customer loyalty. New implementations in digital services and products must be “smart, responsive and tailored to the customer”, describes Ferrari.
All departments should be involved in this new strategy, not just marketing or innovation but also the legal and regulatory teams. The search for a solution in multidisciplinary teams generates the improvement to that solution.
2. Remove barriers between departments
It is advanced in the first point, but one of the features of new digital banking will be the transformation at the organizational level. For the process to be carried out successfully, one of the requirements is to encourage teams to be built that include the hitherto isolated departments.
Cross knowledge is one of the pillars of the new digital culture and it is what fosters responsiveness in business processes, in efforts to create, launch or improve a product or service.
3. Take on new business models and bahevaes as another rival
Financial technology startups are thriving and taking the lead in innovating in financial products and services. How do you compete with them?
Ferrari advocates joining the technological “revolution”, accelerating innovation and assuming the behavior that is leading these emerging startups to success. The question that traditional banks must ask is: if I were a fintech startup what would my profitable sources of business be? And take them on at a large scale.
4. Collaboration and competitiveness
Collaboration is another key pillar in the digital transformation process. Many fintech startups are demanding a more collaborative approach with more traditional financial institutions in order to improve services and products that are ultimately provided to the end customer.
Building or promoting common platforms between these startups and traditional banks will improve the competitiveness of both parties. The proof is that many large institutions, such as BBVA among others, are already opting for this strategy and slowly opening their doors to emerging companies.
5. Working with fintech startups (or even buying them out)
In this respect, linked to the above feature, many institutions are carrying out projects in partnership with the most innovative startups, or they are even buying them out. This is the case of BBVA with Simple and Madiva, or Santander with Funding Circle, for example.
They learn a new business model from these companies, a new way of providing financial services and, in addition, thus remain in the most innovative market. Ferrari argues that a part of developing new products or services in the digital banking of the future, and that of the present, should be outsourced. They are, above all, the solutions developed and designed on the experience of the new digital users.
6. Building an open IT architecture
Openness to new partners and third parties is the sixth feature that the digital transformation in a bank must fulfil. This is the so-called open innovation process, taking advantage of the knowledge of third parties and offering their knowledge to others in turn. Consequently all parties become more responsive in the process.
API platforms come into play here in order to achieve more consistent omnichannel experiences, scalable solutions and improved customer interaction.
Two of the best examples that are implementing this aspect are Fidor Bank and Moven.
7. Responsiveness in innovation planning
Although it may seem a contradiction, the digital transformation process must be continuous, i.e. constantly evolving to keep up with all the innovations that occur in both the financial sector and outside it.
One of the aspects that must be improved is efficiency in responding to new innovations, “learn, act and react”. The innovation laboratories that are being implemented in many banks cannot be flash in the pan and have to impact all departments in the company.
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