Adopting a Tech-Driven Approach in Banking for Modernization
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Chapter 1: The Shift Towards Technological Integration
In the quest to modernize financial services, banks are increasingly embracing the latest advancements in technology. Regardless of their size, financial institutions are integrating tech solutions to stay competitive.
Despite the perception that innovation and traditional banking rarely coexist, the reality is that banks must leverage technology to enhance user experiences and keep pace with the rise of digital-only competitors. Institutions such as JPMorgan Chase are making substantial investments in technological transformation, with over 58 million clients utilizing their digital and mobile banking platforms and ongoing tech upgrades.
Section 1.1: Emphasizing Continuous Innovation
A strong commitment to innovation allows banks and credit unions to enhance functionality and transition to an omni-channel model that integrates both online and offline services. As they implement regular updates, these institutions are also prioritizing data analytics and forming dedicated teams to cultivate their technological capabilities and secure their market positions.
Subsection 1.1.1: Tech Updates as Standard Practice
While fintech companies excel in quickly filling banking gaps, traditional financial institutions still hold an advantage in rolling out new products and features to vast user bases. Startups must rapidly scale to build their customer base from the ground up.
To differentiate themselves, banks are adopting a strategy that leverages their established brands while delivering modern technology. The method of launching new offerings has evolved; instead of quarterly updates, banks are now introducing smaller, more manageable features throughout the year. When viable products are available through vendors, banks can choose to implement these solutions rather than develop them in-house, balancing the need for control over product architecture, data access, and security.
Section 1.2: Leveraging Customer Data
Bank accounts contain a wealth of transactional data that reveals customer behaviors and preferences, yet many financial institutions have yet to fully harness this potential for tailored solutions. This data is vital for creating personalized banking experiences, especially since startups often lack the depth of information necessary for comprehensive user analytics.
The same data can serve multiple functions, allowing institutions to enhance digital banking experiences and adapt systems in response to urgent client needs.
Chapter 2: Overcoming Organizational Challenges
The well-known structural issues within legacy financial institutions often hinder product development. The lengthy approval processes across various hierarchical departments lead to inefficiencies, particularly due to the silos that exist between lines of business.
To address these challenges, the focus should be on forming integrated business units. These teams, led by representatives from design, technology, compliance, and legal, can streamline product development without delays caused by external coordination. By maintaining a clear focus on customer needs and overall processes, these units can prioritize speed, communication, and progress.
Although gaining upper-level input remains challenging, this approach reduces gatekeeping and fosters a sense of urgency. By shifting their focus from groundbreaking innovations to steady, incremental improvements, these units can roll out new functionalities on a weekly or monthly basis, rather than waiting for quarterly updates.
The first video titled "Banks and Insurance Deep Digital Transformation" delves into how financial institutions are undergoing profound changes to meet evolving customer expectations and industry standards.
The second video titled "Banking on Digital: The Race To Transformation" examines the competitive landscape in banking as institutions strive to accelerate their digital transformation efforts.
Section 2.1: The Role of Physical Branches in a Digital World
Amidst the rapid deployment of digital products, one might assume that traditional bank branches are becoming obsolete. However, for major banks, particularly those with extensive retail networks in the U.S., the branch remains an essential element of customer engagement.
The focus for these branches is shifting from transactional services to advisory roles. Customers still value face-to-face interactions, especially for significant financial decisions like home loans and retirement planning. As a result, the demand for mortgage officers, financial advisors, and business bankers who can seamlessly navigate both online and offline environments will persist in the coming decade. Consequently, recruiting and training a new generation of tech-savvy branch staff is critical for the future of financial institutions.
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