By Pete Settles
COVID-19 created a critical challenge for the banking industry. One that many banks weren’t quite prepared for. Now is the time to put their foot on the pedal to accelerate their digital transformation plans, or face losing customers and missing a “once in a lifetime opportunity” to drive efficiencies and cost savings for their businesses. This acceleration is imperative to survive and thrive in the new reality.
Banks need to modify their business and operating models now, to serve customers better, and to prepare their employees to work in completely new ways. The path forward is digital transformation.
According to a new KPMG LLP report: A Digital Decree - Reinventing the Banking Industry in Real Time, digital transformation was a desire for banking executives prior to COVID-19. Three months later it is imperative.
The report says banks must accelerate digital capabilities with a keen eye toward a new set of norms starting with understanding the answers to two fundamental questions facing banks:
Mark Twerdok, Banking Advisory leader, KPMG LLP says: “In the past, many banks looked at digitization as a cost-cutting exercise, and they felt they’d eventually get to the next step of offering new tools for better customer experience. That thinking has to change right away. Customers – both commercial and retail – are looking to be helped, and to be educated. And, banks that can keep those simple ideas in mind at all times stand a good chance to be trusted and then rewarded with loyalty.’’
In the COVID environment, Celeste Diana, KPMG principal, fintech strategy, says more bank leaders are clearly looking at digitization as much as an enabler of better customer experiences as a means for efficient operations and cost cutting. “But the question is how many banks have the technological capabilities’’ to sustain the digital pivot they started beginning in late February 2020 when work from home and personal lockdowns changed the industry?
While some have termed this “a once-in-a-lifetime opportunity, Robert Ruark, KPMG strategy banking and U.S. Fintech leader, said: “while I agree with that assessment, we also have to recognize that not much will happen until banks get over what always has been the sticking points for no movement.’’ Some reoccurring themes are: We need more time to study this ... Let’s do it when we can afford it … Customers really don’t use all these apps … It’s too complicated … That’s a back-office thing.
For Ruark, enterprise-wide digitalization requires that banks “commit to an honest assessment’’ of their current position in digital transformation. “I think many banks probably are going to find their digitization efforts aren’t all that coordinated, and that realization can be both eye-opening and discouraging,’’
Ruark also said that banks also will need to compare their capabilities with those offered by competitors and must be making key decisions based on data.
“The assessment should seek to understand what the bank should be doing from a service standpoint and what it should be doing from a sales standpoint, and the bank must also think about the customer journey.’’ And, there is no way to understand how customers value a service or a product without having the data. Those metrics are essential.’’
For more information, please access the podcast below. To speak with one of the report’s authors, please contact Pete Settles @pgsettles or email@example.com.