The Road to True Digital Transformation in Fintech: Creating Seamless Experiences and Embracing Change

The fintech industry is undergoing rapid digital transformation, reshaping the global financial landscape. As part of this change, while some institutions view having a mobile app as the pinnacle of their digital strategy, true digital transformation requires a more comprehensive approach and a shift in mindset. Digital transformation demands a thorough revaluation of business models, processes, and systems to create a seamless and integrated customer experience. This journey to digital transformation encompasses several core pillars: customer experience, data management in payments, compliance, and company culture. A New Customer Experience, Impacted by Neobanks Neobanks have played a huge part in disrupting the fintech industry as we know it today and are a masterclass in how to adopt customer-centric digital approaches that offer intuitive and user-friendly interfaces that deliver superior experiences. Their impact has been significant worldwide. The global neo-banking market, valued at USD 47.39 billion in 2021, is projected to exceed USD 2 trillion by 2030, with a compound annual growth rate (CAGR) of 53.4% from 2022 to 2030. Neobanks have introduced a new perspective on leveraging data, payments, analytics, and technology to create value and improve services. This has compelled traditional banks to rethink their core processes, including customer service, product development, and risk management, aligning them with digital advancements to compete effectively. As exemplified by neobanks, a superior customer experience has become paramount. Last year, a YouGov survey reported 81 per cent of adults say the quality of online experience determines who they bank with. This has become even more crucial since 2020, with two-thirds (66 per cent) reporting they have used mobile banking apps more often since the start of the pandemic. To meet these expectations, more financial institutions need to harness technology to streamline operations and enhance efficiencies. A comprehensive digital transformation should prioritise the development of intuitive, personalised, and frictionless experiences that add value and establish trust with consumers. This requires an approach that values agility, innovation, and customer-centricity. Payment Success and Beyond At the core of digital transformation and positive customer experiences lies payments, which articulates the user's lifestyle, whether they are consumers or businesses. Surrounding this core system is the front-end payment experience, while on the back end there's data, business intelligence, personalisation, and more. Succeeding in payments is a significant step towards achieving a great digital end-to-end user journey. People want the ability to use their money when and where they want, pay quickly, and receive payments effortlessly. In fact, digital payments are projected to reach 726 billion transactions by 2023, up from 433 billion in 2015. Improving the payment component will significantly enhance customer satisfaction. Traditional financial institutions must recognise the interconnection between digital transformation and data management in payments. The digitisation of payment processes generates vast amounts of data that provide valuable insights into customer behaviour, payment trends, fraud patterns, and more. Leveraging this data enables institutions to personalise their services, offer targeted products, and enhance the overall customer experience. However, the handling of payment data comes with significant responsibilities concerning data privacy and security. Financial institutions must comply with data protection regulations and implement robust security measures to safeguard sensitive financial information. Ensuring the security and privacy of customer data is paramount in maintaining customer trust and loyalty, especially considering the rise in cybercrime. A PwC survey found that 85% of consumers refuse to do business with a company if they have concerns about its data practices. Striking a balance between leveraging data for business benefits and maintaining stringent data privacy and security standards is a vital aspect of the digital transformation journey in payments. The Roles of Compliance and Culture Compliance is another crucial pillar that must be balanced throughout the digital transformation journey. In 2022, fines for non-compliance with financial services regulations totalled $4.17 billion, a decrease of 22% from 2021. Yet enforcement actions for AML-related compliance breaches soared globally by 52%. As operations become increasingly digitised, it becomes imperative for institutions to stay updated with regulatory changes and ensure their processes remain compliant. To achieve this, a strategic investment in advanced technologies designed to automate compliance becomes necessary. These technologies can streamline the monitoring of transactions, detect irregularities, and ensure adherence to both local and global regulatory standards. Alongside compliance, cultivating a digital-friendly culture within the organisation is another crucial pillar of digital transformation. This involves fostering a collective mindset among employees that champions innovation, encourages collaboration, and promotes continuous learning. An institution that embraces a digital-first culture is better equipped to adapt to the changes brought about by digital transformation. Building such a culture is neither quick nor easy. It requires institutions to be open to change, willing to experiment with new ideas, and ready to learn from mistakes. Leaders within these organisations must encourage their teams to approach challenges creatively and view failure not as a setback, but as an opportunity for learning and growth. Only by embracing this shift in mindset can institutions fully reap the benefits of digital transformation. In conclusion, the digital transformation in fintech presents financial institutions with an opportunity to reevaluate their business models, processes, and systems. By balancing the core pillars of customer experience, data management in payments, compliance, and company culture, financial institutions can create a digital ecosystem that caters to the evolving needs and expectations of their customers. The road to true digital transformation is not an easy one, but those institutions that are willing to embrace change wholeheartedly will be better positioned to thrive in the rapidly evolving fintech landscape. Traditional institutions must recognise that superficial adjustments are not enough. As the fintech industry continues to advance, those who innovate from the inside out, by reshaping their mindset and leveraging technology, will be the ones to flourish. Read more articles like this in The Financial Technologist. Download your free copy here.