Digital transformation: why it is important for the financial industry

The innovations and latest technologies dramatically reshape many industries, including the financial field.

15:31 24 September 2020

Robust digital ecosystems replace paper systems and change the way physical banks and financial firms operate. High customer expectations, increasing workload, tough competition, and other factors drive the reinvention and digital transformation. Why do financial companies go digital? What benefits do they get and what you should know before integrating any solution? All the details are in the article.

 

What is Digital Transformation?

 

To understand why it’s so important to go digital, it’s crucial to understand what digital transformation is. It’s the implementation of the latest technologies into the business to optimize the process, increase efficiency, improve customer experience, empower the workforce, and so on. In regards to banks and other financial organizations, the integration of various fintech solutions is meant. Implementing digital solutions, you change the way the business operates and delivers value to your customers. 

 

What are the four pillars of digital transformation?

 

There are a lot of advantages you'll get when digitalizing the company. However, it’s vital that you feel comfortable with failures on your journey, get ready to experiment, and so on. Digital transformation is quite a long-lasting process that requires time and certain efforts. Below we elaborate on 4 pillars of the process to keep in mind at the very beginning of the journey to make it effective and successful.

 

Strategy

 

It doesn’t matter if it’s about the digital transformation or any other project, it’s impossible to succeed without a strong strategy and plan. It’s a foundation and backbone of any integration. So, prior to integrating any solution you should discuss and figure out the following aspects:

 

• Objectives to achieve;
  
  
• Desired outcomes;
  
  
• Budget to spend;
  
  
• Stages of the process;
  
  
• Timeframes;
  
  
• Workforce and teams required;
  
  
• Long-term growth options, and so on.
  
  

People

 

Employees are the driving force of the project. It’s highly important to keep your workers engaged and motivated. According to the McKinsey report, lack of employee engagement results in the failure of 70% of digital transformation projects. As it was stated in the same report, the digital transformation is 6.3 times more successful when there is good communication between the senior leaders and employees, and there is transparency about the change process. Therefore, you can encourage your workers and calm them about the implementation of new technologies.

 

Customers

 

The customer experience (CX) is another crucial aspect to focus on. 93% of financial services companies believe that digital transformation will help them to improve CX and make their service more user-centric. It’s true, innovations and sought-after solutions can enhance CX, help you to retain the clients, and build a brand. The innovations can improve and personalize the service that results in customers becoming more loyal and satisfied. It’s crucial to consider your target audience and explain the new opportunities and features provided so your customers can get most of the changes.

 

Methodology

 

Strategy and methodology have to go hand-in-hand for successful and effective digitalization of the financial organization. Innovations and new technologies will constantly appear on the market and your company should have the right tools to stay current. Implementation of any solutions should be accompanied by such methodologies as Minimum Viable Product (MVP), design thinking, agile working, etc. It’s necessary for reaching settled objectives, meeting certain deadlines, and so on.

 

Why digital transformation is imperative for the financial industry

 

The landscape of financial services rapidly changes. That’s the main driver of the digital transformation of the field. The approaches and solutions used several years ago are no longer effective. Herewith, if you want to stay current, be competitive, reduce the costs, as well as retain your consumers better then it’s high time to build the digital transformation strategy and start the implementation of the latest technologies. The FinTech solutions and software offer a number of advantages. Let’s elaborate on the key ones.

 

More efficiently streamlined processes

 

Efficient business solutions are necessary for the optimization of all the business processes. The main idea of the optimization is that each operation gives out the maximum benefit with minimum cost and/or employees involved. The cutting-edge solutions such as Artificial Intelligence (AI), Machine Learning (ML), chatbots, blockchain, and other solutions can streamline and automate the processes of your organization. That allows you to keep track of all the operations and get a big picture. Gathered data will help you to identify areas for improvement, inform business decisions, and ensure operational efficiency. 

 

Improved customer experience and engagement

 

Today it’s crucial to keep customers happy and engaged. Immediate reply, real-time notifications, access from multiple channels, opportunity to manage the account and funds at any moment, and other demands are not VIP perks, but common requirements to meet. Besides the positive experience, customers expect to get personalized financial service. The modern technologies and solutions can provide all that. The technologies can improve the customer overall journey with every touchpoint and interaction included. Thus, digitizing the financial services company, you simplify banking, attract new customers, better understand and focus on meeting customers’ needs, wishes, demands, etc.

 

Reduced costs in the banking workforce, higher revenue

 

Due to the automation of time-consuming and repetitive tasks, modern technologies can reduce the workload on your staff. Thus, implementation of the fintech frees your employees to focus on other crucial aspects of your business. Thus, AI-powered chatbots can respond to queries 24/7, guide the customers, provide FAQ, gather user data for analytics, and so on. Besides the speed and accuracy, integration of such solutions will reduce the costs because there is no need to hire an employee to do all that.

 

Improved workflow

 

Digital transformation is to empower your employees with the tools that can make them more proactive, engaged, and accurate. Sophisticated solutions can optimize the workflow in different ways. Herewith, integrating modern tools into the company, you can:

 

• Improve collaboration and communication between departments;
  
  
• Get the big picture and track all the operations;
  
  
• Scale the workflow for better performance;
  
  
• Ensure the operation efficiency, etc. 
  
  

Increased competitiveness

 

Cutthroat competition is one of the reasons to integrate FinTech solutions. Digitizing your company, you distinguish your organization among the others and provide your customers with more value. The cutting-edge technologies allow for predictive analytics and help you to personalize the service. Therefore, your clients become more loyal and it’s much easier to retain them.

 

Bottom line

 

The new era, COVID-19 pandemic, high customer requirements, rapidly evolving industry landscape, and other aspects drive the digital transformation of the financial service field. Today the implementation of innovative solutions is vital for the success of the company. AI, ML, blockchain, chatbots, and other techs are essential for the financial firms to stay current, provide positive customer experience, improve the service, keep employees engaged and proactive, and just stay competitive. In the article, we highlighted the main pillars of the digital transformation that you should take into account before starting your journey. Smart adoption of modern solutions will lead your financial organization to better service efficiency, greater business growth, higher product quality, better outcomes, reduced costs, and allow you continuously transform the company to achieve the settled objectives.

 

DDI Development company brings a unique combination of e-business experience and solid technical proficiency to provide high-quality web and mobile digital solutions in a friendly and creative way. We help businesses achieve their goals by offering professional services. Our expertise spans into several industries including e-commerce, CRMs, e-learning platforms, recruitment and financial systems, etc. Our experienced team has delivered 150+ completed projects.