Banking is no longer just a weekday, 9-5 job; it happens 24/7. With modern technology and opportunities, the need to access banking information at any time is vital. Customers expect their banking brands to be available at any time and on any channel (website, phone, social media, email, etc.). For banks, credit unions, and other financial institutions to be competitive, they must create and maintain a “digital-first” mindset that goes far beyond a simple mobile banking application.
The pandemic wasn’t the sole driver of the increase in the interest or necessity of digital banking and financial services, but it did widely improve customer acceptance. BAI Banking Outlook research from May 2021 shows that, in the past year specifically, consumers' digital interactions have significantly changed. Of customers surveyed, 15% started to use the channel, 24% increased usage, and 43% did all of their banking digitally. This increase in usage accelerated because of the pandemic, but this trend is is not temporary. 80% of customers say that they plan to continue using digital banking after the pandemic.
No matter the industry, digital-first is a strategic promise to deliver products and services across various platforms or channels in flexible, convenient, and consistent ways for customers. This can include websites, mobile applications, text messaging, social media, and physical branch locations. Digital-first does not automatically equal digital-only, especially in the financial industry.
In banking specifically, a digital-first strategy enhances the platforms or channels consumers use in various ways. A physical branch location integrates digital banking into the delivery model that customers want to see. In the same BAI research mentioned above, respondents said that the digital resources they would use in the physical branch include video ATMs, interactive teller machines with remote tellers, interactive welcome screens, and digital assistants to answer questions.
Going digital does not entail just launching one application or moderately improving the company’s website. It is about offering all-around digital products and services, including banking and payments, to best serve and benefit customers. There are four key pillars of a digital-first financial institution.
The customer journey should be constantly re-invented for all aspects. Modular micro-services with shared utilities are used repeatedly for creating new business logic. To take advantage of this approach, the current core but be strong enough to last between five and ten years. The risk profile is the lowest among these three approaches, with product complexities and conventional systems being the most significant challenges.
As digital banking continues to progress, four major components should be included in their campaigns:
This approach may be the most technologically advanced because it takes advantage of the cloud and its architecture. New customers are on-boarded with the new technology while existing customers are migrated. This approach is the most seamless and quickest transformation. It can be potentially implemented with the lowest monetary investment but does carry more risk than the continuing modernization approach.
This approach involves rigid system upgrades every few years, guided by a strategical outline or map. It is pretty time-consuming and carries a significant risk when compared to that continuing modernization.
Speaking of maps or strategic outlines, a 2018 Gartner Survey showed that 88% of financial services firms are focusing on strategic digital optimization by adopting several key components:
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Digital-first banking’s central attraction may be the mobile banking application; however, by utilizing your smartphone, developers can also incorporate measures like biometric authentication or digital signatures to ensure that the correct, certified person of the application can access the information. If a physical card is stolen, users can freeze or cancel their card, alert their banks, and also receive notifications regarding unauthorized transactions in real-time. These live notifications can be essential in protecting customers from fraud. By protecting their customers, banks are, in turn, protecting themselves too.
Another component of increased security (next to face recognition and digital signatures) is online notarization. This is just another example of banks finally digitalizing conventional, tedious, and paper processes. While notarization has traditionally been an in-person process, since the pandemic struck in 2020, nineteen states have allowed for remote online notarization and declared it legal. This has allowed for continuous lending servicing to keep happening. E-signature and notarization technologies have been vastly picked up and implemented not just by the finance industry but also across many others. It is secure, instantaneous, reliable, and convenient.
Technology is advancing every single day. For the finance industry, digital-first banking offers a wide range of benefits, including convenience and security. The ability to provide both physical and digital banking services, real-time monetary management, and all-around security (including transactions) is exceptional. The top digital features convince consumers to switch from conventional banking methods to new, modern, instantaneous, and technologically advanced ones.
Financial institutions are increasingly turning to conversational AI to support their digital initiatives. For example, conversational AI-powered chatbots can assist with customer onboarding safely and securely, and they're available 24/7. There are multiple use cases for AI-driven chatbots in banking: