Why digital banking is failing ?

Written by: Niraj Gupta

“We want to go digital; move away from traditional banking to digital and transform our business,” said a senior banker. But in all conversation, he overlooked one component: the customer. My response is simple; ditching digital for a better customer experience is a priority before considering a transition.

Banks around the world are moving towards digital. According to Boston Consulting Group, this led to an increase in online banking by 21%; mobile banking by 30% over 2021. This goes to show that today’s generation or the banking customer wants convenient, fast, and accessible banking services.

Unfortunately, banks tend to overlook that can only be done successfully if the customer experience is satisfied. The platform needs to be tailored made for customers to satisfy their needs, not the bank alone. The business strategy is built around customer behaviour. It consists of needs and wants. In order to successfully achieve a smooth transition, banks need to assess their digital leadership and operational capabilities.

It is an eye-opener for most banks which sometimes it’s too late to realize. Some traditional banks face issues where money is spent on building technology, but they lack leadership capabilities. While others might be strong in leadership capabilities but lack digital capabilities. So, banks need to be truthful in knowing where they stand.

Once identified, the most important factor is working on their operational capabilities. This is inside out where the processes and legacy systems need to be developed. Sometimes it becomes a major roadblock to going digital. So, all the three i.e., Digital, Leadership and Operational capabilities need to perform together.

Banks should realize a few things while building a digital platform for their customers. Digital is not only about bringing the technology and assuming the tech will do most of the work. This is the common mistake done by most of the organizations, i.e., putting the solution before the problem. One of the common misconceptions is treating digital transformation as a tech issue. First, improving our underlying processes which are very rigid in their approach. It then becomes easier to attract new customers and keep engagement with existing ones.

This can be done by having front-to-back approach which focus on three things firstly front end focuses on customer relationship, customer insight and channel while the second part back end focuses on product and services, user insight and developing better user experience based on their need, the third part is simply connecting both i.e., front-to-back.

Once the approach of front-to-back is taken into consideration, then customer journey takes the preceding. The customer journey begins when the customer perceives the need involving a decision-making process. So, we need to think on how to get involved with customer in their decision-making process through chain reaction. This involves a bank process and operating model including some invisible functions such as Risk and Compliance, technology, change management and agile delivery.

Banks need to move away from just offering products and services to customer-centricity. This can be done not only from a technology or strategy point of view, but by making changes internally. Banks who want to bring these changes need to motivate their people to go above and beyond their duty and basic requirements of the customer.

Banks who want to really win the digital race need to first ditch the digital and focus on the customer first.

About the author: Niraj Gupta has over 18 years of experience building marketing, business, and Omni-channel strategies, helping corporations to differentiate itself in the market and enhancing visibility. He has global experience working in multiple geographies such as the USA, France, Singapore, India, Vietnam, and Cambodia. He is currently Director of MACRO Solutions, which is leading service provider for Digital Transformation, building Leadership and Digital Capability along with helping corporation in making Digital Strategy. The company is also leading in Digital Marketing.