Top 3 Trends in Bank Digital Transformation
Last week, we hosted a webinar on how Platform Economics Is Disrupting Banking and what you can do about it. During the webinar, Avoka’s Chief Product Officer Steve Demchuk sat down with Forrester’s Jeffrey Hammond to discuss the trends the analyst firm uncovered in their recent State of Digital Banking Report. Forrester’s survey results echo what we saw in our 2018 State of Digital Sales in Banking Report—namely, that banks fully recognize that digital transformation is necessary for their future success, but banks are still in various stages of building and executing on their plans.
Online Banking Has Reached Almost 75% Saturation
One of the most important banking trends uncovered by Forrester is that 73% of U.S. adults now bank online at least once per month. In addition, more customers are leveraging multiple channels when banking with 20% of consumers now visiting a bank, banking online, and banking with a smartphone in the same month. This means that while banks are developing a digital strategy, they need to carefully consider how their customer experiences are synchronized across channels.
4 out of 5 Banks Are Currently Working on a Digital Transformation Plan in 2018
Forrester’s report also found that 55% of banks are currently working on a digital transformation plan, while another 26% plan to start in 2018 at the latest. This means that 81% of banks recognize that a digital transformation is not only key to their future success, but that this transformation needs to happen soon. Despite years of digital transformation being a top banking trend, only 8% are finished, which means that the vast majority of banks are still trying to navigate the execution of arguably the most important initiative of this decade.
This data was aligned closely with our poll taken during the webinar which found that 82% of attendees were working on a digital transformation program this year, with only 9% already finished.
Half of Banks Are Ready to Take Advantage of Platformification
We’ve written extensively on bank platformification and how critical this trend is for banks to accelerate their digital programs. In our webinar poll, 49% of attendees reported that they are ready to leverage platformification to rebuild their entire customer journey processes with digital technology. But, this means that too many banks are still looking at digital banking as touchpoints or technologies rather than a comprehensive re-thinking of their entire customer journey. Forrester found that leading banks are relying on partners (through APIs) to provide new capabilities and services rather than trying to build these themselves.
The advantages of Platformification include:
- Improved productivity by writing code that matters
- Reduced accumulation of technical debt by limiting the amount of source code a bank maintains
- Accelerated delivery velocity by decoupling services, reducing dependencies, and improving resilience
- Increased flexibility by decoupling UI from UX with APIs
- Accelerated rate of creation of new product and services, internally and through partnership
Questions to Ask Whether Sourcing or Building
For banks that are currently undertaking a digital transformation program, here are 7 key questions to ask about the platform/component/service you are evaluating:
- Helping teams release faster or are they late/over budget?
- Increasing resilience or increasing dependency?
- Reducing technical debt or increasing maintenance costs?
- Can we spread R&D costs or are they worth bearing alone?
- What’s the time to value?
- Can we prove value before incurring significant CAPEX/OPEX costs?
- Do we have the expertise to build, maintain, and secure it?
If you are one of the 80% of banks that is building a comprehensive digital strategy, contact us today to learn how we can help!