Digital Growth Strategies

If there were any lingering doubts about the necessity of digital transformation to business longevity, the coronavirus has silenced them. In a contactless world, the vast majority of interactions with customers and employees must take place virtually. With rare exception, operating digitally is the only way to stay in business through mandated shutdowns and restricted activity. It’s go digital, or go dark.

With this COVID-19 health crisis, customers are more willing, more accepting and more welcoming than ever before to a digital channel, digital platform and digital service. This presents the right opportunity for financial services firms to aggressively drive digital growth strategies.

I was invited as a keynote speaker last month (September 2020) at a Digital Strategy virtual conference focused on financial services firms. I am sharing below the key highlights from my talk – five digital growth strategies.

1) Leverage relevant ecosystems beyond the traditional core: A narrow focus on core adjacencies ignores the broader role a bank can play on behalf of its customers. In a digital banking environment, there is no reason why financial services organizations should be limited to offering only traditional core banking services. In fact, the future of banking will most definitely include the integration of products and services from a variety of providers, all focused on helping the consumer simplify their daily life – without leaving a primary financial institution’s portal … all on a mobile device. By moving into ecosystems beyond the traditional core, banks are able to tap their existing client base and operational capabilities, strengthen engagement, and capture data that will provide a more complete view of customers’ needs.

2) Develop a Financial Supermarket: Taking a page from some of the larger digital businesses, banks can offer a curated and vetted mix of internal and third-party offerings. These typically include insurance, brokerage, and lending services. This aggregation model provides customers with easy, one-stop access to financial products and the ability to address multiple financial needs through a single, integrated channel.

3) Capitalize on growth opportunities shaped by customer Journey: There is a need for enhanced customer experience that takes advantage of digitization to provide customers with cross-channel, targeted, just-in-time product or service information in an effective and seamless way. We’re likely to see a radical integration of the banking experience across physical and virtual environments. Banks need to multiply customer interactions and transform such interactions into hyper-relevant, personalized experiences. It means improving the ability to innovate at the ‘speed of digital’. This requires more than a nice mobile experience. It requires a complete rebuild from the inside-out to enable real-time changes in direction.

4) Monetize customer interaction, engagement and information responsibly: Most banks have a rich set of exclusive information on their customers (key demographic details, where they live, what their top spend categories are, their lifestyle preferences, etc.). Savvy organizations can leverage advanced analytics to extract insights from their customer data and continue internal and external data integration efforts to develop a more holistic view. Detecting those signals of change early will be crucial to optimizing the customer experience and redefining customer value propositions in line with evolving preferences and needs. The outcome of information monetization could be new revenue streams, better products and services, operational efficiency and profit optimization.

5) Evolve into a product, service or infrastructure/platform manufacturing factory: Large institutions can create significant value by leveraging back-end assets to create and provide products or services to smaller banks and other businesses. That’s because many small and nontraditional institutions lack core banking products, infrastructure, capital assets, or even banking licenses, and don’t have the reach or resources to acquire them. The classic example of this kind of service is banks providing credit-card processing to retailers. In the evolving digital era, many new opportunities to offer services like this are emerging. With the growing popularity of FinTech partnerships with banks globally and the continuous wave of new industry players, financial institutions must be able to skillfully develop how to drive effective, mutually beneficial partnerships.