#029: Insights_6 Characteristics of a successful digital transformation in financial services

With digital transformation reaching a fever pitch, Banking and Financial Services Players (BFSPs) must redefine their innovation and implementation cycles to remain competitive and grow sustainably.

Accelerating innovation translates into decreasing operations costs, improving customer experiences, and accelerating automation. But this is easier said than done. Setting up efficient systems and allocating the right resources for a successful journey is daunting, even for major financial institutions.

To overcome these challenges, BFSPs are increasingly adopting?low-code platforms ?to deploy enterprise-grade solutions faster and streamline the entire product lifecycle.

In this article, we’ll explore?six characteristics of what makes a successful digital transformation in financial services?and how the?right low-code solution can help you achieve them.

Why is digital transformation in financial services challenging?

Most financial institutions mistakenly perceive digital transformation as a one-off move, which has a low chance of success due to a lack of required personnel and coordination between people, processes, and technologies.

While there are several challenges that financial institutions experience while tackling digital transformation, there are three critical bottlenecks BFSPs need to be aware of if they want to succeed. They include:

• Changing customer expectations:?customers expect a seamless and convenient digital experience when banking online or via mobile. They want to be able to conduct transactions, check their account balance, view statements, communicate with bank support in case of discrepancies, and more without having to visit a physical branch.
• Rising?technical debt :?as BFSPs operate with multiple disjointed systems and tools, they find it cumbersome to integrate new technologies or launch new upgrades, leading to siloed environments, duplication of efforts, decreased agility, slower time-to-market, higher operational costs, and errors in data management.
• Reliance on legacy and outdated systems:?several financial institutions’ operational models are built on?legacy systems ?that were not made for today’s digital world. With time, these systems have become larger and more complicated, making onboarding new customers and implementing updates or changes difficult. These factors lead to poor performances, lack of speed, huge maintenance costs, and significant downtime and outages, negatively impacting customer satisfaction and retention.

What a successful digital transformation in financial services should look like

A successful digital transformation in financial services should focus on meeting six key attributes that enhance the overall business value fast and at scale.

1) On-the-go digital solutions

Customers have become accustomed to a certain level of convenience, personalization, and simplicity in their interactions with brands. This expectation extends to their interactions with financial institutions.

They now expect banks to provide a seamless, integrated mobile experience where they can use their smartphones or tablets to do everything, from opening a new account to paying for services, resolving billing disputes, or even locating their nearest branch. They expect access to the same digital services and tools, personalized communications and offers, and responsive customer support with high security, privacy, and data protection.

To meet these customer expectations,?banks must adopt a customer-centric approach that delivers an exceptional customer experience.?This requires a deep understanding of customer needs and preferences and the ability to personalize communications, offers, and services based on their behavior and history.

2) Superior CX, responsive UI, and easy navigation

Delivering a modern, seamless customer experience requires significant application development and infrastructure investment. Banks and financial institutions must balance the need for innovation and a sleek user interface with the complexity and security of their backend technology.

They must?prioritize a robust development process emphasizing quality and testing?to avoid accruing technical debt. This involves a thorough understanding of the requirements and objectives of the application, as well as a deep understanding of the underlying technology and infrastructure.

3) Multi-level security protocols

Banks and financial institutions are responsible for handling a vast amount of sensitive customer data that, in the wrong hands, can be used for fraudulent activities. Therefore, it is crucial to code digital applications with multi-level security protocols in place.

A company failing to provide high-level security can lead to serious consequences, including reputational damage, financial loss, and legal repercussions.

To avoid that, BFSPs need to deliver digital security that includes:

• Multi-level security protocols:?implementing multiple layers of security to protect against various threats. This includes encryption, firewalls, intrusion detection systems, and access control mechanisms.
• Firewalls and intrusion detection systems:?designed to monitor network traffic and detect and prevent unauthorized access attempts. Access control mechanisms, such as passwords, two-factor authentication, and biometric authentication, ensure that only authorized individuals can access sensitive data.
• Agile digital applications:?require regular updates with the latest security patches and training employees in proper security protocols and procedures.

4) Performance-driven and market-relevant digital banking solutions

BFSP’s must develop and deploy digital banking solutions that are both user-friendly and scalable, secure, and capable of meeting the ever-evolving market demands.

To achieve this, BFSPs must?adopt an agile approach?to software development that allows them to?rapidly prototype, test, and refine their solutions in response to changing market demands.?They need to leverage modern software development methodologies such as?DevOps ?that emphasize continuous integration and deployment, as well as continuous testing and monitoring.

These modern approaches allow organizations to quickly identify and address performance or usability issues in their digital banking solutions and ensure they remain competitive and relevant in the market. Moreover, they can deliver innovative features and functionalities that address the unique needs of their customers, such as mobile banking apps, digital wallets, and AI-powered chatbots.

5) Seamless integration with external systems

BFSPs must employ open APIs (Application Programming Interfaces) to ensure seamless integration with external systems.?By adopting open APIs, banks and financial firms can enable third-party developers to access their data and services, creating new opportunities for collaboration, innovation, and value creation.

This includes integration with external payment systems, financial management applications, and other digital services that can?enhance the customer experience . Moreover, open APIs help deliver more personalized and tailored services to their customers.

For example, by allowing third-party developers to access customer data, banks can provide personalized financial advice and insights based on individual spending habits and preferences.

6) Tailored and customized customer solutions

Financial service providers must have a deep understanding of their customers' needs, preferences, and behavior. They must?collect and analyze customer interactions, transactions, and feedback to gain insights into customers' preferences and pain points.

This information can then be used to develop tailored solutions and personalized experiences that address specific customer needs. Financial service providers can offer customized services by leveraging advanced analytics and artificial intelligence (AI) technologies.

Financial service providers can identify patterns and trends by analyzing customer data and using this information to recommend customized products and services to their customers.

How OutSystems helps in developing state-of-the-art digital financial solutions

While we discuss the potential challenges faced by the BFSPs and the key attributes of a modern banking experience, the question that arises is,

"How do you accomplish all these goals and devise innovative solutions for the digital banking world?"

The solution is?high-performance low-code software development .

OutSystems high-performance low-code platform ?helps firms fight the odds of legacy code, siloed environments, and lagging innovation to build and deliver new features and forward your digital transformation goals.

Here’s why OutSystems is the right ally in your digital journey:

• Speed of development:?OutSystems accelerates app development by as much as 50%, thus reducing associated costs proportionally. This is a real deal for banks and financial institutions wishing to innovate their offerings per market dynamics, deploy new features fast, and address bug fixes, all with minimal coding demands.
• Modernization made easy:?with?OutSystems, BFSPs can modernize their legacy systems ?via iterative development. They can create new applications that integrate with their legacy systems, enabling them to automate complex workflows and improve operational efficiency.
• Seamless integration with internal and external tools:?OutSystems provides a range of pre-built connectors and integrations ?that developers can use to integrate with external systems. These connectors are designed to work seamlessly with OutSystems applications, allowing developers to quickly and easily connect their applications to external tools and systems. In addition, OutSystems provides an API management module that enables businesses to manage and expose their APIs to external developers and partners in a secure fashion.
• Painless custom development:?OutSystems enables developers to create custom workflows and procedures by simply dragging and dropping pre-built components onto a visual canvas. This makes it easy for developers to create custom workflows that meet their organization's needs. OutSystems also provides a range of pre-built components and integrations that developers can use to create custom workflows. These components include connectors for popular third-party applications and pre-built templates for common workflows, such as loan origination and account opening.
• Pixel-perfect mobile apps:?OutSystems provides a range of features and tools that enable developers to create?custom mobile applications . For example, the platform includes built-in responsive design features that allow mobile applications to adapt to different screen sizes and resolutions. This ensures that the applications look and work great on any smartphone or tablet device. Its pre-built templates for common mobile banking use cases, such as account management, payments, and transfers, make it easy for developers to implement such workflows.
• Security and compliance standards:?with OutSystems, BFSPs can streamline their operations. For instance,?the platform includes built-in security and compliance features ?to help BFSPs meet regulatory requirements and protect sensitive data. OutSystems also offers tools for testing and deployment, making it easy for BFSPs to release new applications and workflows quickly and with minimal risk.

Read the complete resource here: 6 characteristics of a successful Digital Transformation in Financial Services .