In the ever-evolving landscape of banking, CEOs and CTOs are investing heavily in digital customer experiences. Hyper-personalization, super apps, virtual assistants, and other digital amenities are now the staples designed to capture and retain an increasingly fickle customer base. Yet, crafting seamless digital banking remains a formidable challenge, especially when 87.5% of digital transformation initiatives reportedly miss their initial objectives, according to the Harvard Business Review.
To help navigate this complex terrain, let’s delve into nine common hurdles banks face across three critical stages of technology projects: envisioning, developing, and scaling. We will also offer a set of solutions that banks can adopt to overcome these challenges and enhance customer experiences.
Critical stages of technology in digital banking
Envisioning stage
Customer is always right, but are you listening?
While most banks claim to be customer-centric, many merely satisfy rudimentary banking needs like managing deposit accounts and facilitating transactions. In a highly competitive market, however, being ‘customer-obsessed’ is non-negotiable. Regularly reviewing and enhancing products and services is crucial, and the addition of value-added services like AI chatbots or budgeting tools can set a bank apart.
Bridging the business-technology gap
A common pitfall is the misalignment between a bank’s technological development and its core business objectives. This disconnect often occurs due to a lack of effective collaboration between business and technology leaders, leading to delayed projects and unclear priorities.
Timing is everything: Technology evaluation
New technologies are continually emerging, and falling behind can cost banks their market leadership. However, adopting new technology too hastily can backfire, as seen in the rise of digital-only banks overtaking traditional ones in the early days of mobile banking.
Developing Stage
Illusion of feature frenzy
Driven by the desire to keep up or outdo competitors, banks sometimes focus on rolling out numerous features that may not actually meet customers’ needs, leading to wasted resources and opportunity costs.
Infrastructure: A house of cards?
New features built on outdated legacy systems can create a complicated web of dependencies. Take the case of online bank Simple; its promising front-end innovations fell flat due to incompatible legacy backend systems, leading to the bank’s ultimate failure.
Underutilized engineering talent
A bank might boast an exceptional engineering team, but without an emphasis on engineering excellence, they may not deliver their full potential value. Poor tools and processes can negatively impact developer productivity and, subsequently, product quality.
Scaling stage
Global customer: A balancing act
Customers who travel or relocate should not face inconvenient service gaps or be treated as new customers. Banks must strike the right balance between centralization and localization for a seamless customer experience.
Raising the ecosystem bar
Banks collaborating with fintechs and other third-party services must ensure that customer experience (CX) benchmarks extend to these partnerships, avoiding integration or service level agreement issues.
Security vs. Usability
While digital scaling exposes customers to cybersecurity risks, countermeasures like Captchas or mandatory multi-factor authentication can interrupt the user experience.
Navigating through digital banking pitfalls
To sail smoothly over these hurdles, banks should focus on three pillars:
Customer
Keeping customer delight at the center is crucial, supported by constant research and feedback. Techniques like continuous discovery and behavioral science principles can help focus product development efforts effectively.
Technology
An engineering-first culture enables banks to remain agile and attract top-notch talent. Practices such as continuous integration and continuous delivery must become industry norms, empowering teams to deliver better.
Organization
Alignment at the organizational level ensures that customer experience doesn’t become a casualty to conflicting priorities. This means CX must be a priority in strategic discussions, navigated by leaders who can foster and support CX-centric initiatives.
In summary, digital transformation in banking is fraught with challenges but rife with opportunities. By identifying common pitfalls across the envisioning, developing, and scaling stages—and taking a holistic, customer-centric approach—banks can significantly elevate their digital customer experience. With the right focus, technology, and organizational alignment, the path to digital success becomes much clearer.
