Digital Technology Is Transforming Banks

Verint Systems’ Matt Tengwall Discusses How Customer Demands Are Driving the Need for Enhanced Services and Options

Matt Tengwall headshot
Matt Tengwall is general manager, fraud and security solutions at Verint Systems.

In recent years, the term “digital transformation” has gained prominence across various industries, signifying a fundamental reimagining of how organizations leverage technology to improve business processes.

Within the financial and banking sectors, digital transformation has become synonymous with the increasing shift toward mobile and online banking, as well as the widespread adoption of cloud-based services to enhance customer engagement and streamline internal operations. The retail banking industry today is experiencing a profound shift, driven by new technology, increasing competition, regulatory complexity, consolidation and evolving customer expectations.

To remain relevant and competitive, banks must embrace digital transformation as a critical pathway to modernization.

Changing Consumer Trends

Technology has played a pivotal role in the growth of the banking market in recent years. Major institutions report a significant increase in the amount of financial activity conducted on mobile devices and in the number of digitally active customers. Instant access to a wide array of banking services is now expected, and customers prefer digital self-service through mobile apps and online platforms over traditional in-person or phone banking. The COVID-19 pandemic accelerated this trend, as customers increasingly turned to digital channels for convenience and safety.

To respond to these demands, banks must prioritize seamless digital experiences across all channels. This not only fosters better customer engagement, it also leads to richer lines of communication, strengthening the bank-customer relationship.

Elevated Customer Experience

Competition in the financial services industry is intensifying, prompting banks and credit unions to prioritize the customer experience in order to stay ahead. To do this, financial institutions must invest in the right talent, foster diversity within their teams, and leverage technological capabilities to analyze customer data and improve products and services.

A customer-centric approach is vital in today’s market, where consumer loyalty can make or break a bank. By collaborating across business units, including on product development and design, banks can better understand customer needs and preferences, leading to tailored solutions that enhance the overall experience.

The Cloud in Banking

The adoption of cloud technology in the financial sector is gaining momentum as banks recognize the advantages it offers. Cloud migration, while complex for financial institutions because of their diverse IT and hardware landscape, presents significant benefits.

Lower maintenance and operational costs are among the primary advantages of cloud adoption. In addition, cloud infrastructure is scalable, allowing banks to adjust resources based on demand, reducing the need for expensive physical hardware. This flexibility enables faster innovation, accelerated product development and improved time-to-market for new services.

Security concerns have discouraged some banks from fully embracing the cloud. To overcome this obstacle, banks must approach cloud migration with a well-defined strategy, ensuring a smooth transition while maintaining stringent security measures to protect sensitive customer data.

New and Evolving Risks

As digital banking expands, new risks and challenges are emerging, requiring banks to implement robust security measures. The shift to digital channels has provided criminals with new opportunities to exploit vulnerabilities in bank infrastructure, leading to incidents like ATM “hook and chain” attacks.

To combat these security challenges, banks must adopt a layered approach to security. Relying solely on traditional security approaches is no longer sufficient as criminals become more sophisticated in their tactics. Implementing advanced technologies, such as multifactor authentication and artificial intelligence- (AI-)driven analytics, can significantly enhance a bank’s security posture and protect against emerging threats.

The Promise of Future Innovations

As banks embrace the digital transformation, the potential for future innovations is vast. Mobile banking and artificial intelligence (AI)-based solutions are expected to continue evolving, revolutionizing the way banks interact with their customers and adjust their internal processes. Automation will play a crucial role in improving operational efficiency, reducing costs and enabling banks to focus on providing personalized, value-added services to customers.

Data analytics will help banks better understand customer behavior, allowing them to tailor products and services to individual preferences. By leveraging data insights, banks can make informed decisions and offer targeted financial solutions, further enhancing the customer experience.

Digital transformation is no longer a choice for banks; it is an essential pathway to staying relevant and competitive in the rapidly evolving financial services landscape. By prioritizing customer experience, adopting cloud technology, mitigating emerging security risks and exploring future innovations, banks can accelerate their modernization and create a more efficient, customer-centric and resilient financial ecosystem.