Don’t let economic uncertainty cloud your digital roadmap: How banks can chart a clear path for innovation

Don’t let economic uncertainty cloud your digital roadmap: How banks can chart a clear path for innovation

By Peter-Jan Van De Venn, Vice President, Global Digital Banking, Mobiquity

Rising interest rates, persistent inflation, and regional bank failures are just a handful of the challenges banks face today. As a result, many financial institutions are tightening IT budgets and focusing on short-term initiatives that deliver quick results.

But with eight in 10 Americans preferring to bank online or via mobile apps, banks can’t afford to scale back their digital transformation goals. New customers are keen to bank at institutions that can meet their expectations for digital-first experiences — and existing customers are more than willing to switch if their current banks can’t keep up.

Banks must develop a clear and cohesive strategy to differentiate their digital products and enhance customer experience and innovation. In today’s digital banking landscape, it’s even more crucial that banks find a way to set themselves apart from the pack.

How short-term thinking jeopardizes long-term growth

In the face of economic headwinds — or just as challenging, economic uncertainty — it’s tempting to halt projects that don’t immediately benefit the bottom line. Too often, digital initiatives end up on the chopping block.

But this short-sighted approach is like standing still in a race. You may not be losing, but you’re not gaining any ground either. Meanwhile, your competitors are running laps around you. Banks indeed need to be extra diligent about spending, but cutting costs shouldn’t come at the expense of serving customers and providing engaging, personalized digital touchpoints.

Customers today are more likely to switch banks than they were in the past and digital experiences play a crucial role in their decisions. In fact, four in 10 customers say they would consider switching banks based on digital features.

Instead of scaling back digital investments entirely, banks should focus on allocating resources more effectively. The banks that will emerge stronger from the current market are those that strike the right balance between short-term gains and long-term growth.

Do’s and don’ts of digital differentiation

Competition in the digital era is fierce. Whether it’s neobanking alternatives such as Chime, peer-to-peer lending platforms, or digital wallets like Venmo, customers have an abundance of options when it comes to digital banking, making it even more difficult for banks to stand out from the crowd.

In addition to competing with other financial institutions, banks are also being compared to tech giants like Google and Facebook. Customers now expect the same level of service and convenience from their banks as they do from technology companies.

But with a clear digital roadmap, banks can create unique and compelling experiences that attract new customers and retain current customers amid economic turmoil. Here are a few do’s and don’ts when it comes to adapting your current digital transformation strategy in the current economic environment:

Don’t reinvent the wheel

Mobiquity research shows that nearly 80% of digital banking features are virtually the same. Rather than developing standard features and functionalities, you can more efficiently allocate resources by focusing on key areas of differentiation.

Must-have features — such as online and mobile account management, transaction overviews, and card management — are still important. But there’s no reason for banks to build these features in-house when they can leverage existing assets, out-of-the-box solutions, and third-party vendors. Doing so will free up budget and capacity to focus on fine-tuning products and features that actually help you stand out.

Do focus on your unique brand promise

One size does not fit all in the banking world. What works for one institution may not necessarily work for another. That’s why it’s vital to understand your brand promise — and build digital offerings that align with your unique value proposition.

For example, one of our neobank customers has successfully targeted tech-savvy millennials with innovative offerings, including an augmented reality feature that allows users to project their future bank cards using their iPhones. This unique customization option has helped them carve a distinct identity as a leading digital innovator.

Don’t innovate where you can’t differentiate

Innovation shouldn’t be pursued for the sake of innovation alone. Every digital innovation should align with a business goal, contribute to the organization’s overall vision, and further differentiate your brand from competitors. That’s why it’s crucial to set clearly defined goals and KPIs, tracking progress and challenges along the way to success.

By considering your organization’s business goals and objectives — and the technology necessary to support that endeavor — you can create a digital strategy that strikes the right balance between innovation, viability, and profitability.

Do craft experiences with customers in mind

It goes without saying that your customers should be at the center of your customer experiences. Then again, some banks forget or forgo this vital rule. Every successful digital initiative starts by understanding your customers, their needs, and how you can meet them.

Most customers blend digital banking with in-person experiences. Whether customers are banking on your app, online, over the phone, or at a branch — or combining any number of these touchpoints — it’s crucial to provide seamless, intuitive, and personalized customer experiences across channels. For example, you can offer options for customers to initiate the account opening process online, upload necessary documents, and then schedule an appointment at a branch to finalize the process.

Maximizing ROI on innovation

You can’t predict the future — or the economy’s trajectory — but you can set the stage for long-term growth and resilience by maximizing the ROI on digital initiatives. Smart, strategic digital roadmaps focus on areas where differentiation makes a difference and provides greater value for your customers and your organization.

By identifying and enhancing points of differentiation features, you can create a distinct and compelling digital experience that resonate with customers, strengthens your brand, and captures new business — no matter what’s around the corner.