Digital banking transformation involves the integration of data, advanced analytics and digital technology into all areas of a financial institution, changing the way work is done, priorities set and services delivered. Become a Data and Analytics Leader Enhance Consumer Experiences Foster Innovation Leverage Modern Technologies Upgrade Systems and Processes Reskill Your Workforce Align Leadership and Culture for Digital Future Unlocking the full potential of digital banking transformation requires the use of data, analytics and artificial intelligence to deliver an exceptional customer experience. The challenge that was found in research by the Digital Banking Report is that, while financial institutions understand the importance of data and advanced analytics, 75% of institutions don't consider themselves adept at using these capabilities. COVID-19 shifted consumers' use of digital technology in an instant, creating more awareness of the potential of digital apps and creating new digital habits. This has impacted the way consumers bank and the expectations consumers have around digital solutions and digital engagement.

Playing a game of catch up, banks and credit unions have accelerated their digital banking transformation efforts. They have invested increasing amounts of capital and human resources into data and advanced analytics, innovation, modern technologies, back-office automation, and a reimagined workforce with a mission to improve the customer experience while reducing the cost to serve. Much of the impetus is because the fintech and big tech competitive landscape continues to expand, offering simple engagement and seamless experiences, causing customers to fragment existing relationships with their existing bank and credit union providers. The good news is that there are a multitude of options available to work with third-party providers that can deploy solutions faster than can be done if developed internally. Incumbent institutions can also partner with fintech and big tech competitors while modernizing their existing systems and processes at the same time.

The growth of digital banking usage, the emergence of new technologies, the blurring of industry ecosystems and an increased focus on innovation are creating challenges and opportunities in banking. Consumers are increasingly turning to fintech solutions and big tech platforms, fragmenting existing relationships for essential financial services, such as deposits, loans, payments and investments. The importance of developing and deploying new digital services, building new business models, and transforming from a product-centric to customer-centric culture should be the focus for all banks and credit unions going forward. No longer can these initiatives be long-term objectives. They must be accomplished now … at digital speed and scale.

Digital banking transformation has enabled many financial institutions to become more prepared for the future as the world was disrupted by the pandemic. For those banks and credit unions that have become the most digitally mature, the focus on improving the customer experience, increasing the use of data and advanced analytics, and deploying new technologies has positioned them at a competitive advantage. Despite the progress made, all financial institutions will need to increase investment in digital banking transformation initiatives, responding to marketplace expectations and adjusting business models to reflect a highly altered banking ecosystem. A great deal of the focus in 2022 will need to be on back-office processes that are highly outdated and have slowed the progression of all digital banking transformation efforts. The future will also see a greater involvement of banking staff in building humanized experiences for transactions that were initiated digitally.

Now more than ever, we are seeing digital transformation at the most progressive institutions moving beyond mobile banking upgrades and modest changes in back office technologies to becoming organization-wide initiatives. With budgets increasing and new advanced technologies being implemented, ownership of the digital transformation process at leading banks and credit unions is moving up the organizational chart, with the more digitally mature institutions having the process led by the the CEO or even the board of directors. We are also seeing greater cross-functional engagement across market-leading institutions. Understanding how leading organizations are managing their digital transformation process is more important than ever to the future competitiveness of banks and credit unions of all sizes. Unfortunately, as we found in the area of innovation, a surprisingly small number of financial institutions (12%) consider themselves to be digital transformation'leaders', with 34% considering themselves to be'fast followers' and 55% stating they were either'mainstream players' or'laggards'.

With digital transformation creating an industry-wide shakeup, the financial sector has been no exception to this extreme disruption. Increasing usage of smart devices, better connectivity, and demand for high end-user experience are some of the key aspects driving the digital transformation trend. According to Research and Markets, the digital transformation market is expected to grow at a CAGR of 23% from 2019 to $3.3 trillion by 2025. Most CFOs agree that a digital banking transformation strategy should leverage technology and improved processes to deliver an exceptional user experience. The end-users should include both customers and employees, with the interests of both internal and external constituencies being considered in the development of the digital banking transformation roadmap.

Digital banking transformation involves the integration of data, advanced analytics and digital technology into all areas of a financial institution, changing the way work is done, priorities set and services delivered. More than just a technological upgrade, digital transformation requires a cultural change that challenges legacy processes, encourages innovation, and rethinks all aspects of risk and reward. The objective of an organization's digital transformation process might be to improve the customer experience, reduce costs, streamline operations, reduce friction, become more agile or increase profitability … or any combination of these objectives. In any case, digital banking transformation will disrupt business models that have been the foundation of the organization for decades. This is why true digital banking transformation is so difficult to achieve – it's more than simply delivering the same product on a new app.

Digital banking transformation involves the integration of data, advanced analytics and digital technology into all areas of a financial institution, changing the way work is done, priorities set and services delivered. More than just a technological upgrade, digital transformation requires a cultural change that challenges legacy processes, encourages innovation, and rethinks all aspects of risk and reward. The objective of an organization's digital transformation process might be to improve the customer experience, reduce costs, streamline operations, reduce friction, become more agile or increase profitability … or any combination of these objectives. In any case, digital banking transformation will disrupt business models that have been the foundation of the organization for decades. This is why true digital banking transformation is so difficult to achieve – it's more than simply delivering the same product on a new app.

While the potential benefits of digital technologies are well documented and accepted by a majority of bank and credit union leaders, the deployment of digital banking transformation does not appear to be keeping pace, according to the Innovation in Retail Banking 2019 report, published by the Digital Banking Report, and sponsored by Infosys Finacle in cooperation with Efma,. This is concerning given that the pervasiveness of required digital transformation is moving beyond the IT area of banking to include virtually all areas of the organization. Financial institution executives surveyed indicate that budgets are increasing for almost all digital technologies and that the technologies being impacted are expanding. At the same time, the ownership of both digital transformation and innovation are moving up the organizational hierarchy, with cross-functional teams being leveraged to break down legacy silo perspectives. When asked about the progress of digital transformation efforts, only 17% of organizations surveyed indicated that the transformation was'deployed at scale', with 41% stating that digital transformation was'partially deployed'.

While the potential benefits of digital technologies are well documented and accepted by a majority of bank and credit union leaders, the deployment of digital banking transformation does not appear to be keeping pace, according to new research conducted by the Digital Banking Report. This is concerning given that the pervasiveness of required digital transformation is moving beyond the IT area of banking to include virtually all areas of the organization. Financial institution executives surveyed indicate that budgets are increasing for almost all digital technologies and that the technologies being impacted are expanding. At the same time, the ownership of both digital transformation and innovation are moving up the organizational hierarchy, with cross-functional teams being leveraged to break down legacy silo perspectives. When asked about the progress of digital transformation efforts, only 17% of organizations surveyed indicated that the transformation was'deployed at scale', with 41% stating that digital transformation was'partially deployed'.