The “innovate-or-die” mantra is even more resonant in the banking industry than most. That’s why finance companies, faced with the possibility that a young digital upstart could eat their lunch (as Uber has for taxis, and Airbnb for hotels), are investigating third-platform apps by the hundreds.
On the lending side, for example, new consumer platforms such as Prosper, Lending Club and Marlette Funding have left traditional banks suddenly playing catch-up on using digital technology to improve customer experience and gain digital efficiencies (full disclosure: Marlette Funding is a client of my firm).
Meanwhile, the era of Facebook and Twitter has ushered in a new desire by customers to use their smartphones for both communications and conducting business wherever and whenever they want, and they expect the companies they do business with to keep up. Companies are keenly aware that they need to accelerate their ability to attract and retain customers.
Done properly, a strategic digital transformation can help banks meet the evolving needs of their customer base. It can also help reduce expenses and optimize lending practices that enable them to offer their customers benefits like lower fees and lower rates.
Through our experience with financial institutions, we’ve identified four key steps to smooth the transition from legacy processes and systems to cutting-edge digital solutions:
- Step #1 – Understand Customers’ Wants and Needs
We live in a world where consumers expect a high-quality user experience from digital applications, and they expect to derive personal benefit from using them. If they aren’t getting those things they simply won’t use them. One of the biggest reasons digital initiatives sometimes fail is that businesses neglect to really understand what customers want. So before embarking on significant changes, banks should take time to talk with customers to understand their pain points, explore the types of digital services they are interested in and learn how they would use these the services in their daily lives. - Step #2 – Develop Product(s) to Address Customer Pain Points
One of the benefits of developing digital products today is that it’s relatively easy to create an early prototype and put it in front of customers for their buy generic vardenafil input. The prototype should offer a fully clickable representation of the intended offering that allows customers to test its functionality and developers to learn more about how they use it. This continued user input will enable the software developers to create a feature set informed by the user experience as they begin writing the actual software code. - Step #3 – Employ Fast, Iterative Development
Whether relying on an in-house team or an outside consultant, banks must take advantage of the fast, iterative development that will enable them to go from concept to commercial deployment in a matter of months, not years. Not too long ago, this would take several years and cost millions of dollars. But today, new software tools and an agile methodology are shrinking both time to market and budget requirements to undertake such dramatic changes. Features and functionality once requiring tens of thousands of lines of code now can be done in a single line of code that calls an existing package. Plus, developers can leverage current solutions that years ago required complex, custom software development. - Step #4 – Roll Out Digital Products on a Phased Basis
Banks should not feel pressured to release a full product to all customers on day one. You may want to start with power users or targeted members for a trial period, before expanding it to the entire customer base.
One advantage of an online platform is that features and functionality can easily be added at any time. When introducing something new, it’s easier for customers to grasp just a few new features at first, adding more features once customers are accustomed to the initial changes. This phased approach also enables developers to study how users interact with the first features, enabling them to adjust follow-on features accordingly.
Banks were one of the first industries to adopt computers in the 1960s. Today, as the banking business is being revolutionized again by digital technology, following these four steps can help you roll with the changes and come out ahead. You can bank on it.
Bret Waters,
