There’s no denying that modern banks and financial institutions need to be eyeing digital transformation if they want to remain relevant. But how to get there can be a bone of contention. When it comes to digital transformation, there is no silver bullet that will magically change all banks into digital experts.
According to PwC, the path a bank chooses all depends on the size of their bank account and their risk appetite. Some, will choose to iterate, improving bits and pieces over time. Others, opt to innovate by overhauling entire processes and making big investments into their digital transformation journey. PwC’s Bank to the Future white paper outlines three paths banks can follow on their digital transformation journey. These include: Front End Only, Wrap and Digitise and Going Digitally Native.
In this blog post, we’ll unpack the first one and in the coming weeks, we’ll explore the other two in more detail.
Front End Only
As the name suggests, this approach to digital transformation entails only innovating and improving the front end; making cosmetic fixes without changing up any of the tech infrastructure.
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- This is the simplest and fastest approach as it is primarily focused on bettering how customers interact with a bank, be it via a website or app etc.
- The bank will develop an attractive mobile app and web interface but makes minimal change to workflows, culture and back-end infrastructure.
- Ideal for banks looking for a “quick win”.
- Perhaps not a final destination but a solid step in the right direction.
- Having only made cosmetic changes, the bank is limited in what is can deliver. For example, customers might be able to apply for a credit card using a mobile app, but without the back-end systems required to support this action, they’re likely to have the same experience they had in the past.
- This can cause frustration for customers, as the front end makes promises but the back-end is not advanced enough to deliver.
- This can actually cause costs to rise, as more manpower is needed to maintain the digital front end and to handle requests that can’t be handled automatically.
Ultimately, deciding to only make investments in the front end can prove more costly. However, this is a good starting point for financial institutions that lack the budget to spend large amounts of money on their digital transformation efforts.
Next week we’ll be looking at the ins and outs of a Wrap and Digitise approach to digital transformation. Want to read more stories like this? Every month, we produce a newsletter that brings together all of the latest business and digital trends. You can subscribe to it below.