Justifying investments to become a ‘digital bank’

With advancements in technology and an increasingly demanding consumer, investments in digital transformation can be the foundation for decreased costs, increased revenue and greater customer satisfaction. Most banking executives struggle, however, with understanding the optimal allocation of digital investments, and the measurement of business results, due to the multitude of product/segment silos and the complexity of channel delivery and usage combinations.

In the Novantas analysis, Digital Investment: Success Driver or Bottomless Pit?, authors Chris Musto and Paul Kadin point out that financial executives are becoming skeptical of proposals and funding requests because of previous digital investment initiatives that delivered lackluster (or poorly documented) results. For example, despite a great deal of investment and predictions of great returns, online account opening has failed to meet expectations, damaging the credibility of many early advocates.

Part of the problem is that many new account opening implementations are simply iterations of old paper-based processes, with far too many steps and complexity that is not online or mobile-ready. Another significant issue is the presence of sales models that encourage the ‘restart’ of digital consumer new account opening engagements to avoid losing new account sales commissions at the branch level.

“The digital channel planning challenge is real, yet often made more difficult by constricted calculations that omit customer/market considerations and cross-channel ramifications,” says the analysis. For example, restricting future investments for improved digital account opening processes ignores the documented importance of digital channels in achieving early attention and engagement of digital shoppers and generating new business online and at the branch level.

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