4 Keys to Embracing Digital

The charm of pre-internet, brick-and-mortar community banks and credit unions was that they mastered the art of the experience economy. Open lobbies that smelled of fresh coffee and offered comfortable seating attracted both customers and non-customers. Personalized services like checkbook balancing were available in many branches. Credit union staff members knew their customers by name, were deeply embedded in the community and acted as trusted financial advisors. This enabled them to build knowledge and insight about members and strategies to convert other community members.

Because of reliance on this time-tested branch model, the financial services industry has been slow to sense and respond to changing business demands and technology trends. Technology was viewed as a cost center, and most bank and credit union leaders were uncertain about how technology could be leveraged as a competitive advantage.

Today, the industry finds itself at an inflection point. Digital transformation in banking has been evolving at a “ludicrous speed.” Francisco Gonzalez, chairman/CEO of the global bank BBVA predicts that, “Up to half of the world's banks will disappear through the cracks opened up by digital disruption of the industry.” Moreover, a 2015 study by Accenture found that the de-bundling of financial services by fintech represents a 30 percent potential revenue risk to banks.

The future holds big wins or rapid failure depending on the choices banks and credit unions make today. With the right technology, business model, and strategy, I believe these financial institutions can protect and expand their market and wallet share, increase profitability and thrive.

To do so will require leaders to embrace the speed of digital transformation and get serious about what qualifies as a digital banking strategy. Pushing out mobile banking capabilities to customers, for example, is not a digital strategy. A true digital banking strategy requires a major business model change that aligns every level of the organization and offers a seamless customer experience consistent with the digital marketplace.

So, where should banks and credit unions start in the digital transformation process?

1. Create a virtual community coffee lobby. Extend the open branch, brick-and-mortar banking model to your digital community. Expand your definition of customer to everyone who physically and virtually touches your credit union. Make simplicity, convenience, and user experience the triumvirate objectives of your digital strategy. Be ready to meet your customers when, where and how they want to engage with you through a consistent, omni-channel platform. Ensure that connections between you and your customers are entirely digitized using multi-media that integrates seamlessly across all touch points.
2. Get to know your customers. Once you’ve expanded your definition of customer and created an integrated community space, get to know who your customers are and what they need and value. Adopt big data analytics to collect and analyze buying behavior, browsing patterns and how they prefer to interact with you. The insights you’ll gain will enable you to strengthen customer trust by offering products, services and advice they truly value. Show customers that you empathize with them as they make financial decisions. Let them know you are there for them when they need expertise and that they can rely on you to provide unique value for their broader financial lives.
3. Be quick to pivot. Fintech providers have shaped your customers’ expectations by offering simple, convenient and user-friendly financial services. Your customers will not tolerate having to print documents, call a representative or visit a branch to complete a transaction. Think beyond traditional banking and be quick to pivot when your analytics show that something is not aligned with your digital strategy. Contrast your digital product offerings with those from fintech, and increase the pace of innovation to serve changing customer needs.
4. Don’t go it alone. Digital transformation is a complex journey. Partner with the right technology advisors and providers to bridge gaps that might exist in your organization. Deploy multi-structured data analytics to gain deeper insights from multiple formats such as systems of record, web applications and social media. Data aggregators can enable you to conduct predictive and prescriptive models to tailor individualized products and services to your customers.

Jim Collins, author of Good to Great: Why Some Companies Make the Leap and Others Don’t, wrote, “The test of a first rate intelligence is the genius of the AND. Preserve the core AND stimulate progress. Share the values AND change the company ... .” Today, banks and credit unions are well positioned to preserve their core and adapt a digital banking strategy. Leverage the trusted relationships you have built in the community and reshape your business model to be the digital financial hub for your customers well into the future.

Naseer Nasim is a Fortune 500 executive who leads change through collaboration and big-picture thinking. Recognized as one of the leading technology executives in the fintech industry, Nasim serves as a board member and advisor for Center for Executive Excellence, ReFlex AI, AdVision, and Virtual Keyring. He is a thought leader in digital transformation and a frequent contributor to financial publications.