A digital transformation roadmap

The digital offering is becoming one of the key propositions for a (private) bank. Digital strategies deal with the shift in business model that will provide a competitive edge going forward.

Within the entire gamut of the financial services industry, private banks are one of the late adopters of digitisation.

With the business strongly rooted in traditional client interactions, private banks only embraced the digitization wave long after they were faced with evolving client needs, an increasingly competitive landscape and sustained regulatory pressures.

This has led to the emergence of three phases of digitisation. While the market leaders are already expanding, smaller players in the industry are still exploring the right approach to take.

Phase 1 - Exploration

The initial phase of digitisation starts with the banks seeing the need to digitise and upgrade certain aspects of their online offerings. Banks look to enhance their online offering and venture into the world of mobile banking with selected features albeit in silos.

For example, popular features during this phase are mobile optimised websites and online access to client statements. However, while institutions digitise selected aspects of their service through independent initiatives, they lack synergies across different aspects of the bank.

Some wealth management firms introduce online offerings to establish digital access to products and services.

However, client on-boarding and other functions such as portfolio risk management are usually not integrated into these platforms.

Thus, the touch points created for clients are scattered across the different phases of the client lifecycle – from prospecting to account closure.

Phase 2 - Integration

The second phase of digitisation is driven by the need to offer competitive products and to create a differentiated client experience.

For any digitally-savvy client, the options in the market are currently wide and they can easily compare services offered by competing financial institutions and start-ups. Thus, the need arises for differentiation which pushes banks to look at improving their service attributes to enhance client experience.

Banks are trying to address this need to differentiate but are faced with a plethora of potential features.

Hence, there is a struggle to scope in the most value-adding features and implement them with the limited time and resources.

Synpulse has helped key players to put this into perspective and developed the eWealth Framework. This offers a structured approach banks can adopt, to capture client requirements and prioritise them to achieve their goals.

Banks in this phase realise that enhancing the client experience also involves digital transformation of internal aspects of the organisation to align with their client facing initiatives.

The goal is to create efficiency in all aspects of client interactions through alignment of front-to-back operations to offer faster turnaround times.

Phase 3 - Expansion

The key goal in the third phase is to attract and retain a broader client base. Ubiquitous access to digital platforms matched with highly-mobile and global profiles of clients creates a tremendous opportunity for banks to scale up their offerings across borders.

However, ensuring compliance to investment suitability, product and country restrictions on a digital platform for a diverse and cross-border client base could create stumbling blocks for private banks.

Synpulse developed the “Feature funnel” concept to ensure that the offerings presented to clients are in line with both the internal and external regulations, and also the banks’ expansion plans.

Essentially, there are four layers of the “Feature funnel”. Starting with a fixed set of features the offering is adjusted according to client profiles – for instance reduced functionality for non-account holders.

The next filter ensures regulatory and internal policy compliance and product suitability. The final filter is user-configurable that allows them to define customised views either by grouping or (de-)selecting features or portfolios.

Moving through the phases

The initial exploration phase of digitisation is ridden with a silo’d implementation of features across the bank.

For banks in this first phase the key is to understand the market standards and make a build-or-buy decision. Having established a baseline, those banks in the second phase need to adopt an integrated approach that promotes synergies across the front- and back-office functions.

The result of this would be improved client experience and digital alignment of all services.

Integrated digital platforms lay the foundation for the next wave of digitisation which comprises innovative and personalised features. This includes mobile access to a wide variety of the bank’s services offered to a broad client base across borders.

In this third phase, the banks must look to focus on higher penetration as well as the usage of their digital platforms.

Key success factors in this phase includes compliance with cross-border and internal guidelines as well as automated digital enrolment.

While the market leaders are already expanding their digital footprint, smaller players are still in the explorative phase. The key is for these banks to seek support and assistance to first assess the maturity of their online offering.

They are then in a position to address their challenges in each phase by applying industry best practices and transition towards a holistic and scalable online platform that facilitates sustainable revenue generation and seamless client experience.