Co-Owner & CTO of software and product development company Geniusee – specializing in innovations and Fintech.
Do you want to know how to create an effective digital banking strategy? Maybe you’ve tried, but nothing has been working out. If it’s any comfort, we’ve all been there; we know how much effort the right knowledge can cost. Fortunately, the story doesn’t have to end there.
This article presents recommendations for creating a growth strategy for digital banks in a simple, practical way.
Ready? Here we go.
Follow these steps to design an efficient digital banking strategy.
Creating a digital banking strategy is a step-by-step process. Skipping any of these steps jeopardizes your plan to improve your banking experience.
Begin with a discovery phase.
According to research by CB Insights, 9 out of 10 startups fail due to the lack of need for their product. Such an unfortunate product launch can only occur when the startup skips the discovery phase. This exact stage is created for researching your target market to know whether it needs your product. This phase also helps you shape the product and discover the minimal features to bring it to market and analyze the first results. When done correctly, you’ll get a clarified report of your customers’ feedback on your product, and you can ascertain your competitors’ weaknesses.
Select the ideal business model.
Another benefit of the discovery phase is that it gives you sufficient information about which business model suits your bank best. What model does your successful competitor use? Target ways to offer better service than they do with these suggestions:
• Digital Front End: This is the development of a new virtual front end on already existing fundamental systems. It’s a tactical approach that often meets the mark in a digital-first world.
• Neobank: A new bank is created digitally from scratch. There are no restrictions by legacy (foundational) systems, and you have the freedom to create.
• Digital Aggregator: Your bank may play an aggregator role that allows it to connect with third-party fintech firms and develop an integrated customer experience. It’s more or less an open banking philosophy.
• Digital-First: This technique combines the best of both the traditional and digital banking worlds. Such banks focus on creating innovative solutions while upholding previous standards.
Optimize data analytics.
Data analysis remains a crucial tool in determining the ideal fit for your customers and how to provide them with tailor-made experiences.
Take advantage of artificial intelligence and big data to analyze important trends. One such metric is target market behavior over the immediate six months. That will supply you with emerging technologies and needs, which you will be innovative enough to solve. Proper data analytics transforms your bank from a standard service supplier to a visionary problem solver. It makes for a crucial part of a digital banking transformation strategy.
Comply with key regulations.
Be warned: Getting lost in the excitement of new technology development to the extent of flouting key regulatory structures is damaging. But don’t worry — there’s a solution. Set up an independent review and control unit for internal checks and balances. This unit can also help preempt risks to improve how they’re managed. Such a system affords you the privilege to establish more agile risk-mitigation and compliance frameworks.
Get mobile banking right.
Don’t forget that mobile banking is a volatile project; a simple error can undermine your effort. Fortunately, if you follow the golden rules, you can do it correctly. What are the golden rules?
Follow the golden rules for retail banks.
The popularity of mobile banking is creating “golden rules” for consumer banks, which ensure customers have the best experience. These rules are:
• Simplicity: Your mobile app has to be simple to use. Customers shouldn’t require training to use your platform.
• Relationship: Customers have to feel you care about them. Therefore, you have to establish a relationship with them. You may do so through social media and other platforms.
• Traffic: You have to develop a model for gaining an audience. This may be done by offering unique features, simplifying processes and marketing sufficiently.
• Speed Of Innovation: Banks are consistently finding more ways to improve their technological level. You’ll have to make updates that improve the customer experience. This may mean creating a platform that enables the use of your bank through smartwatches.
The golden rules are fundamental pillars to design an acceptable strategy for the digital banking industry, but that’s not all.
Mind security issues.
As a digital bank developer, you have to forecast potential threats and create solutions for them. Failure to do this can have extreme consequences. For instance, Capital One suffered a breach in 2019 that compromised over 100 million customer accounts. This attack, which gave the hacker access to social security numbers, addresses and credit scores, happened due to a wrongly configured web application firewall.
There are numerous other instances of hacker attacks on digital financial institutions. As such, you must be thorough with your security mechanisms. It is also necessary to have a consultant who is familiar with the country’s laws for which the team builds the application to avoid legal problems.
Should you hire a third-party developer for your digital banking strategy?
Hiring external hands for your virtual banking strategy can be a good option if you don’t have a capable in-house developer team. It should be a software company that handles full- and partial-cycle product development projects and has diverse experience creating different types of products, including financial and banking services.
Digital banking requires the appropriate incorporation of innovative technological tools. However, these project development processes can be costly and unrewarding if handled by an incompetent developer. Consequently, it may be better to outsource the contract to expert software developers.