I am currently working on a global market assessment of digital banking services, and my interviews with banks and service providers alike are showing that technology implementation is less of a concern than how digital services will change the way customers and banks interact. As customer/bank interactions change, the industry’s competitive forces will change, and this will eventually change the industry participants.  

Hence, digital banking services implementations have been focused on the customer experience and business outcomes rather than technology enablement per se. Key business outcomes sought include:   

• Improved brand integrity via consistent customer experience – consistent experience across omni-channel and the entire value chain is required, with data and workflows pulled from across all customer channels
• Enhanced brand via greater clarity of bank offerings – customer and bank need to agree expectations over what each is willing to offer and accept in the relationship. AI support is required to identify requirements and capabilities. Banks need governance flexibility to allow greater transparency (e.g. an open book approach to offerings)
• Improved customer management and sales across product silos – the bank must identify the customer and their key attributes across products to enable more effective cross-sell and lifecycle management. Customer data needs to be scrubbed from existing bank silos and external sources and analyzed in real-time to offer optimum product sets to customers
• Alignment of business drivers and operations – requires coordination within the bank across LOBs, operations, IT, and external technology vendors to deliver required business and technology capabilities, including governance and group communications to identify business goals/challenges and identify the appropriate technology to address those issues
• Reduced time to market and cost of new product introductions – requires access to greater product sets without the cost of internal development. The technology required is ‘open platform’, so that third parties can plug into the platform. The challenge is for banks to manage a growing, and continuously changing ecosystem of vendors as ‘brokers of services’.

These changes, if done well, will increase customer satisfaction, retention, wallet share, word-of-mouth referrals, and customization.

In summary, digital banking is changing the way banks are engaging with their customers. Unlike prior technology waves, this one does not include the rip-and-replace cycle of technology implementation to create new functionality. Digital banking is intermediating between people (i.e. customers, employees, and vendors) and operations (i.e. existing operations platforms which are not being replaced). And digital technologies’ new intermediation capabilities make it possible to deliver customized offerings, which can create higher value for each customer.

However, if governance does not advance in step with the technology, customer value will decline. It is imperative that banks have the culture and operational maturity to pursue these goals effectively, or it will become a value destroyer for them.

I will be publishing a global market assessment of digital banking services in the next few months which will explore these issues in greater detail and provide examples of successful implementation business cases.