United States

Digital do’s and don’t’s for financial institutions

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Digital transformation is one of the hot topics of the day.  With the global pandemic the ability to utilize digital technology to support customers is more top of mind than ever.  It is important that we not lose site of the customer as we focus on the technology that is available to us.  Business processes and your organization are as important to digital transformation as the technology that is implemented.

We do not want to automate a bad process.  When considering a process for automation we need to consider if that process is a good candidate for automation.  Some of the questions to consider are:

  • Is the process largely rule based and are these rules clearly defined?
  • Is it a high volume process?
  • Is the process regularly repeated?
  • Does the process interact with one to three data sources?
  • Can the process leverage document / character recognition technology?

Don’t assume you know what your customers want and what products / features they are using, without checking your data.  Avoid investments and decisions that only support “right now” –think about where you want to be five years from now.  Institutions are utilizing tools to harness both internal and external data to drive real-time decision-making and improve performance.

Don’t assume your digital strategy should be formed and run by the IT department. The institutions who have most successfully driven their customers towards digital awareness and digital product usage have an established leader for digital products and services.  This role includes:

  • Owning the digital strategy of the bank
  • Owning the knowledge for digital features and functionality of current products and services
  • Owning the process to update that knowledge base as capabilities are changed/enhanced over time
  • Overseeing internal awareness of digital
  • Leading external awareness campaigns of digital capabilities for customers

Do take the impact of digital transformation to your staffs under consideration.  Limited resources in terms of time available and skillset have to be considered.  Our community financial institutions do not have unlimited budgets so we must make choices on digital investments that will best support our overall business strategy.  If we fail to do so we can end up with siloed priorities, wasted time and money, stressed and confused employees, poor deployments, and negative impact to customers.

Don’t forget the impact to your back office when undergoing a digital transformation initiative.  Here are two examples.  

If you implement online account deposit origination:

  • Ensure back office processes to review and post accounts to the core are not manual
  • Ensure paper forms aren’t being printed just to scan back in to the document management system after account opening
  • Ensure manual forms aren’t still used for change of address and account maintenance processes

If you increase online loan application availability:

  • Ensure the decision making process is streamlined, and parameters for auto-decision making vs manual decision making have been considered
  • Ensure front-line staff are trained any potential questions, to lighten the burden on back office staff that will be processing applications, booking loans to the core, and servicing
  • Ensure manual forms aren’t still used for loan account maintenance
  • Review process for gaining approvals for loan account maintenance on business loan accounts (i.e. emailing back and forth between loan officers and loan operations

When considering a digital transformation effort there are several fundamental keys to success.  Strong, clear & consistent message of support from Executive Management is an absolute must.  This will help lead to management and team buy-in and support.  It is also critical to customize your process and timing to align with the institution’s ability to support change.  Incenting staff to become more knowledgeable about the financial institution digital capabilities can lead to wider acceptance among the customer base.

Another tip is to tackle processes that will provide early results that clearly demonstrate value.  Define metrics to measure success and incorporate reporting into a formal communication plan to share with team members and stakeholders.  Adopt a change management methodology that recognizes dependencies between processes, teams and tools.

In the current environment we will all be called upon to embrace digital technology more fully.  This is an opportunity to develop better processes that leverage technology to improve our ability to serve our communities.  Our experiences with remote work and remote customer support during the pandemic will accelerate the acceptance of digital channels and digitally enabled processes.

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