Updated on 28/04/2022

Towards Digital Transformation in Finance

Digital transformation in finance is having interesting results, especially as the world of innovation and the world of finance converge.

What are the best best practices to follow? They range from Cloud Computing, to Blockchain, to social communication: below, 7 steps to transform digitalization into a successful opportunity and for an effective digital transformation in the Finance sector.

The world of technological innovation and finance is getting closer. And when that happens, the results are definitely interesting. Among other things, this is demonstrated by the data relating to Fintech, that is, those start-ups with a distinctly digital organisational system, which offer some financial services in direct competition with traditional banks, towards a digitalization of the banking sector.

In order to have an order of magnitude, investments and operations in the fintech sector, represented globally by 7500 start-ups, have reached, all over the world, the amount of about 150 billion dollars and the raising of capital reaches 121 billion (source: Sole24ore). This incredible success is due, among other things, to the fact that the wall of distrust of these services is definitely collapsing.

In Italy, for example, one in four people also said they had tried a FinTech service in the last year and were very satisfied with it.


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In particular, Italians liked these services for the speed of implementation, the transparency in investment management, the fact that they can benefit from some products free of charge and the increased security guaranteed by increasingly modern and reliable software.

It is better to dwell on this last figure.

If FinTech can be successful in a country like Italy that is typically slow to embrace digital, this means that something is changing. Digital transformation in finance is the future.

The confirmation also comes from the behavior in recent years by three companies that most of us interact with at least once a day: Google, Facebook and Amazon. These three giants, in fact, have long been taking steps to enter the financial sector, launching some services specifically for its users.

Let’s take Facebook as an example.

In 2017, the giant owned by Mark Zuckerberg obtained a license in Ireland to issue electronic payment services, enabling it to export to Europe (theoretically), the payment system already active between Facebook Messenger users in the United States. In addition, recently Zuckerberg himself stated that he was testing payment services in India through Whatsapp and, since the feedback was positive, the company has decided to expand this product to other countries.

Moreover, last August, Facebook announced that it was entering into a strategic partnership with some of the world’s largest banking groups (including Citigroup, Wells Fargo, JP Morgan Chase) to give users the opportunity to check their current accounts through their Facebook Messenger account.

Beyond the issue of privacy, which is also relevant and topical (just think how much the Cambridge Analytics scandal cost in terms of budget and reputation), what we need to be interested in here is another aspect of this issue.

Facebook, as well as Google and Amazon, see the financial sector as a territory to conquer that has considerable potential but is yet largely unexplored.

No panic, so much innovation 

Banks, however, cannot stand by and watch. On the contrary, it is essential that they are able to take advantage of digitization to increase market share and to make their internal processes more agile, effective and, therefore, more economical for customers.

Doing so, of course, is not easy, but all the major credit institutions start from two major competitive advantages.

  1. The first is that, despite recent reputational crises in the financial sector, human contact is still essential. In fact, even though the demand for digital services within the reach of smartphones is constantly growing, clients are still looking for reliable professionals to provide consultancy services in more complex transactions.
  2. Secondly, banks can count on a large amount of data about their customers, collected thanks to a widespread penetration in the territory, made possible by a large number of branches in each city.

The conditions for remaining competitive in the market are there, but you need to move quickly so as not to be left behind.

Above all, it is necessary to follow some best practices, which allow you to take into account the different aspects of digitization and to modify your business structure to offer services that meet customer expectations.

1. Digital transformation in finance – rethink the customer experience  

The first aspect, perhaps one of the most important, is about customer experience.

Today and at every level, customers have become more demanding. They are no longer satisfied with being a passive part of the transaction but want to be at the center of a customer experience that is able to meet their expectations.

In essence, it is necessary to put the customer first, moving from a “product-centric” approach to a “customer-centric” marketing strategy.

Moreover, it is no mystery that the quality of the customer experience will be an increasingly important element in determining a company’s success or failure.

This is made clear by a study from KPMG, “L’era della Customer experience,” (The era of the Customer Experience) which shows how brands that have best understood the strategic value of the customer experience are those that have best managed to export their business model around the world, leveraging the right digital channels to offer a homogeneous and recognizable experience to customers in all the countries where it does business.

In this sense, the case of FinecoBank reported in the study is interesting because it has managed, thanks to digitization, to build a successful customer experience by integrating high-performance digital platforms and a network of professional financial advisors into a single reality.

In this way, it is able to respond to all the needs of its customers through a single account.

2. Data contact

As mentioned above, banks have a large pool of data at their disposal, but they do not always have the capacity to use it properly.

Instead, the data must be the basis from which to build any strategy or business model.

Therefore, it is essential that each banking institution have a data analyst who can collect relevant data, interpret it and, finally, make it understandable to all.

This figure is strategic for guiding the business of a traditional bank in a far-sighted and coherent way. For this reason, it is not surprising that, according to research by TAG Innovation School, 50% of small and medium enterprises are willing to hire a data expert in the next 3 years.

From the point of view of customer experience, data also plays an important role. It allows us to get to know our customers better and to anticipate their needs. In this way, a closer relationship can be established (or rebuilt) with consumers, who will feel heard and considered by a bank that really takes care of their needs.

An example of how data can play a significant role in recovering the lost customer relationship is the Royal Bank of Scotland.

Over the past year, the Scottish credit institution has invested around £100 million to implement “Personology,” a system that alerts customers if they are paying for services already included in the bank fee or if their mortgage interest rates have become too high.

Through a personalized and almost entirely data-driven customer experience, the Royal Bank of Scotland has managed to regain the trust of its customers, aiming to use this new service to increase its market share.


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3. An omnichannel bank

Another fundamental best practice is the process of digital transformation in finance

In Italy, the number of branches is decreasing.During 2020 there was a reduction in the number of bank branches active in Italy, from 24,312 at the end of 2019 to 23,481 at the end of 2020 (source: bancaditalia.it).

This is consistent with the new behaviors and needs of customers, who prefer to carry out banking operations through their devices and simply go to the branch only to request advice or for other more complex activities.

Traditional banking institutions must keep this trend in mind and aim to build a customer experience around their customers in which all available touch points function consistently and are integrated seamlessly throughout the customer journey.

In other words, the bank needs to become omnichannel.

In this way, you will not only be able to combine physical sales channels with digital channels, offering an integrated and dynamic shopping experience, but you will also be able to have an extra tool to build more lasting and ongoing relationships with your customers.

An effective strategy could be to give customers the opportunity to start a financial transaction directly from home via computer and to conclude it at the branch, a strategic element in maintaining a presence in the physical territory where the bank operates.

4. Get closer to customers

To remain competitive and embrace digital transformation in finance, banks must reduce the perceived distance between the company and the customer. The best way to do this is to personalize the customer experience.

Having a personalized service means dealing with a bank that knows you and that considers your needs important.

For this reason, in a world that tends to eliminate all forms of intermediation, banks must integrate their institutional communication with other types of communication.

In this sense, the use of social media is essential for a number of reasons.

  • First of all, social media allows the creation of connections, which facilitates two-way communication between bank and customer.
  • Secondly, social platforms allow you to effectively advertise your products and services by using everyday language and through the ability to precisely target content based on user characteristics. For example, a gaming activity could be used to explain a complex service, targeting a certain type of customer, who is identified by its KPIs.
  • Finally, social networks are also important because they allow you to provide customers with simple and responsive customer care.

This aspect leads us directly to the next best practice.

5. Customer care and artificial intelligence

An essential component of a good customer journey is the customer care service, which must be efficient, fast, and personalized. For this to be possible, the human relationship is no longer enough. Instead, chatbots are frequently employed to manage, at a minimum, wthe first contact with the customer.

Developing and using Artificial Intelligence in this area proves to be a forward-looking strategy because it allows banks to exploit the large amount of data they possess to make the customer experience much more personal.

The importance of this best practice is demonstrated by the fact that, by now, several banks have adopted such technologies in their business.

An interesting example of digital transformation in finance is Ambrogio, the chatbot developed by Creval to collect customer requests, process them, and forward them to the most suitable human operator. This solution, which perfectly mixes digital and human components, earned Credito Valtellinese a place as a finalist in the ABI competition for innovation in banking services.

6. The bank in the blockchain network

Another particularly important best practice is to implement the use of blockchain within your own transaction management processes. It is true that this would mean opening up part of your information to third parties, but the benefits in return would be considerable.

Blockchain “is a distributed database that uses peer-to-peer technology and anyone can take it from the web, thus becoming a node of the network.”

In other words, it is a sort of shared book of accounts that records all transactions expressed in Bitcoin and approved by one of those who form the nodes of the network within which these transactions are placed.

Its implementation would allow the bank to make interbank transactions in a way that is much faster and more transparent, allowing customers to benefit from faster and safer payment services.

Not only that.

Blockchain would reduce the risk of litigation to which banks could be exposed, since each transaction must be verified “manually” and validated by at least 50% of the nodes in the network and since each change leaves a trace along the chain.

In the light of all this, it is not surprising that 14 Italian banks have already started testing Blockchain technology in order to concretely verify its advantages and to establish a shared quality standard.

7. Success in the clouds

Document management is a fundamental aspect for any banking institution that wants to remain competitive.

Within a bank, in fact, there is no shortage of documents, but the problem is that often their management is expensive, slow, and inefficient. In this sense, the cloud is a considerable resource for digital transformation in finance.

First, the cloud allows you to increase your flexibility and scalability, optimizing costs and avoiding over-exploitation of your IT department.

Secondly, cloud solutions improve the bank’s ability to innovate through efficiency and productivity, and increase the responsiveness and resilience of institutions in situations of particular stress (for example, in periods of peak demand from customers).

Finally, partially or completely transferring your documents to the cloud allows you to strengthen business continuity, as storage and computing capacity is distributed over multiple remote systems capable of ensuring availability and reducing downtime.

Although the cloud adoption rate among banks is not yet particularly high, the interest of traditional financial players is not lacking and some banks are moving in this direction.

This is the case, for example, of Westpac, which recently stated that it had started a cloud strategy to transfer its main financial applications in the cloud. The feeling is that, to reach the top of the market, it is necessary to pass through the clouds.

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