What are the Steps to Digital Transformation in Banking Sector?

Ever since COVID-19 gatecrashed the world, banks are stopped face-to-face interactions and have sped up the process of digital engagement. Starting in 2020, almost 20% of banks started leveraging tech, and this number has dramatically risen ever since.

The automatic opening of digital bank accounts is one significant change technology has brought into the banking sector. Additionally, APIs are leveraged to create new products and services that drive innovation. Some financial institutions have even started migrating to the cloud for faster speed to market.

With the increased remote experiences and cyber threats, banking institutions are poised to witness more technological innovations in the long run. While a few financial institutions are hesitating to take this more significant leap, most started recognizing the tremendous advantages of digitally transforming how a bank works.

Want to plan a digital transformation strategy for your banking institution? Follow the article to implement proper transformation techniques and make a resilient change.

Is there a Promising Future for Digital Banking?

Before we make a call on whether you can start implementing a digital transformation strategy right away, let’s look at the foreseeable future of digital banking.

Sci-Fi Security

With digitalization comes the danger of customer data being seen by third parties, aggravating the cyber risks. In the future, technologies like data analytics, artificial intelligence, and automation will be utilized to priorly detect fraud and potential threats to digital banking sites.

New Technologies

Financial institutions have already begun scratching the surface of AI and automation to look at their value to a bank’s daily operations. Blockchain technology has already proven to be a boon for investment banking institutions. In the future, banking institutions will leverage more technologies to maintain a solid customer while delivering a wide range of services.

Adopting the Agile Culture

With the rise in technology usage, banks need to speed up revamping their business models. The focus of these business models should be speed and agility. Banks are starting to think outside the box and adopt digital technologies by utilizing the agile working methodology to stay on top.

As you can see, there is a greater chance for financial institutions to optimize their products and services through digital transformation. To reach there, banks must utilize the data, tools, and platforms at their best disposal.

5 Steps to Successful Digital Transformation in Banking

By now, you might be well convinced that technologies impact banking operations, competencies, and customer experiences in a good way. However, like many others, if you are also finding it challenging to acquire digital resources and start the digital transformation process, we’re here to help you. Here’s a step-by-step plan to successfully transform any financial institution digitally.

1. Be Clear With Objectives

The digital transformation team at a financial institution must discuss several questions before achieving workplace transformation. The team must put focus on points like what the organization wants to accomplish. Does it want to bring in new customers with digital services? Does it want to improve legacy systems? Does it just want to improve its loan portfolio?

For instance, a financial services company based in the UK, Santander, wanted to create an ecosystem that has more agility and simplifies day-to-day processes. It is understood that it ran the IT processes poorly, leading to inefficiently managed resources. It resorted to an agile operating model and integrated most processes.

So, once your goals and objectives are set, it becomes a cakewalk to deal with the further steps. After your objective is set, keep the following in mind −

  • Think if you need support from a third party

  • Keep all your data and metrics in hand

  • Whether you want a gradual progression or a radical one

2. Evaluate your Technology and Process

The next foundation you must build on is assessing your current service and product inventory. A thorough review of your current processes can give a deep insight into where you stand and if you need to work on them.

Do you implement annual product planning activities that align with your strategic goals and budget? Do your current processes support the digital shift? Do you have a process for monitoring consumer feedback on social channels?

When you can answer these questions, you’ll get an analysis of what more you need to introduce to improve your digital transformation efforts.

While deciding on transforming your processes, think about −

  • Branch services

  • Whether the current digital services are up-to-date

  • Omnichannel experiences

3. KYC through Data and Analysis

Digital transformation in the banking sector is nothing but providing customized services to valuable customers in faster and more efficient ways. To get here, you need to start aggregating your data to understand your target audience better.

So, try and analyze how you segment your customer. Is it based on demographics, purchase history, or a product mix? Can your digital services align with these customers?

The goal here must be to predict how many of your customers are likely to go ahead with your upcoming digital services so that you can plan with targeted marketing

4. Improve Technical Talent

For digital transformation to occur, technical talent is the need of the hour. Financial institutions or banks cannot create world-class experiences that attract clients are coming to expect without it.

Building a creative corporate culture that can compete with tech giants like Google, Apple, and Amazon is the first step in attracting high-performing product managers and software engineers. The fact that these tech companies nurture and persuade their employees and immerse them in an innovative culture that aims to solve the world's most difficult problems and create cutting-edge products is one reason why they have been so successful in attracting top technical talent.

5. Build a Product Mindset

Digital transformation in every sector is an ongoing process. Financial institutions must stay abreast of customer expectations at any point in time. This process requires a product mindset. How can you develop this mindset?

  • Always look for a KPI to work on

  • Be clear with the problems of your target audience and how you can solve them

  • Design the top 3 ideas and start building prototypes

  • Measure the results of these and the impact on your audience

  • Learn what’s working for you and repeat


Along with the above steps, banks also need to build enthusiasm among their staff and also customers. You can develop an internal communication plan where you can clearly explain how your digital transformation strategy works and what your customers can expect from you.

Once you execute all these steps and still feel you’re lacking in something, reach out to a trusted digital transformation partner who can provide turnkey solutions designed specifically for your business.

Updated on: 10-Feb-2023


Kickstart Your Career

Get certified by completing the course

Get Started