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The first steps in creating a digital strategy for your bank are not about choosing the
technology. Rather, the first steps in creating a digital banking strategy are to: 1) understand
your customer demographics and the banks target markets; and 2) assess the culture, appetite
for change, and innovation of the bank.
Creating a digital strategy similar to how every other bank is doing it will get you what everyone
else is building. It is no surprise the industry, in general, has a follow-the-leader mentality in
many aspects. But it might not meet your banks objectives, attract your customer segments,
and effectively target your markets.
Targeting effectively means less cost and more revenue. If you dont put your customer
segments and your targets market first, you might spend a lot of time and money building
something that attracts customers but not your segment of customersand it may cost
more than you needed to spend. Not that its bad to attract new customer segments. It is
just something you should think about as you design your strategy. Remember, attracting
customers just to attract them is not always paradise. It just might be Pandoras Box.
All banks need a digital strategyand it must be sponsored by the CEO. That said, its
important to know that not one size fits all. You need to determine your own approach
appropriate within your culture and business. There are effectiveand provenways of
doing it.
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For example, a recent study by Nielsen, Digital Enablement for Retail Banking, found that
mass affluent baby boomerss dont really use mobile banking. The highest usage rate of 5% is,
in fact, to transfer funds. In contrast, these boomers are heavy users of online banking:
checking balances (92%), obtaining information (88%), transferring funds (87%), and checking
balances (86%).
So if this is your target market, shouldnt your digital strategy be heavily weighted on the online
channel?
If your target is mass affluent millennials, the strategy may change quite a bit. Their usage of
online looks similar to the boomers mobile, abysmal (per the Nielson research), but maybe a
little higher. Usage of mobile is heavy for millennials, and to no surprise, they feel all channels
in banks take too long. They are more likely to use alternative payment methods. This goes for
Gen Z as well.
So if this is your customer base or target market, you most likely should be providing these
types of methods now. This is not to say your strategy should not include other channels and
investments. Your customer segments still have expectations for performance and future
enhancements. Someday, this group will be replaced with the generation behind them, and you
need to be prepared for the change.
It comes down to phasing in technologies rather than not introducing them. Its all about when
and where to focus. Short term makes sense for the channels and preferences your customer
segments and target markets want now. Near term looks toward technology for future customer
segments or target markets, based on building a more effective digital strategy.
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