Top 3 Approaches to Digital Banking Transformation

In most parts of the world today, customers are becoming used to the “bank” as an app rather than a building, and traditional banks are responding accordingly. How?

Every bank is going digital, and rightly so.

Every bank that actively serves customers today has no choice but to make that transition. The first step is to identify the bank’s place in the digital banking spectrum and follow a clear roadmap to becoming a digital-first bank.

Because banks are different in their core capabilities, not all banks are ready to embark on a full digital transformation. So to help with that, here are three ways a bank can transition into a digital bank.

1. Frontend?wrap

This is the most straightforward method. It focuses on the primary ways customers interact with the bank: its website and mobile app.

The bank designs an attractive mobile app and web interface, but its operations, culture, and backend infrastructure remain the same.

This should only be a step in the transformation journey and not the endpoint, as it is merely superficial and may not stand a chance against digital native banks in the next few years.

2. Wrap and?digitise

Here, the bank goes digital with its frontend and goes a step further. The bank gradually replaces its legacy infrastructure with digital technology while also integrating the middle and back offices.

This approach takes some time, but it’s an excellent option for banks that can’t afford to go all in at once.

3. Go digital?native

The bank creates a digital native product that uses a fully digital customer interface and backend. This approach delivers significant cost savings in the long run and equips the bank to adapt quickly as the market shifts.

Here’s how it works…

The bank starts as a minimally viable bank (MVB) with only a handful of products. It may concentrate on payments, lending, or any of its most commonly used products. This approach to digital transformation primes the bank for explosive expansion.

Going digital native cuts down costs significantly and helps the bank phase out its branches, which will soon begin to cost too much to keep open.

It makes the bank a lot more agile. The bank is able to adapt instantly to fast changing customer tastes. Also, it lets the bank test and iterate swiftly on its products.

The bank’s new digital core and open architecture will also allow flexible approaches for collaborating with third parties to offer a highly profitable range of products and services.

Launching a digital bank requires a complete shift in mindset.

Digital banking is an entirely different operational model that calls for fewer, less-siloed middle and back-office teams. It also requires that banks collaborate with third party providers rather than developing their own technology solutions.