Trying out new methods of getting through to your customers can be difficult and downright scary for any retailer. But when it comes to the age-old arena of retail banking, it may be even harder to embrace change.
The truth is, though, that change can have a direct effect on your bottom line. (And that's a language that any banker worth his or her salt speaks fluently.)
So what's the big deal with "going digital," anyway? And why is it worth banks and credit unions' collective while? Let's discuss.
Old systems are expensive
A lot of banks and credit unions are operating on old or legacy systems. They may be tried and true with your frontline staff, but they're also dodgier when it comes to glitches and shutdowns and the upkeep can be expensive. A move toward digitization through upgrading your day-to-day systems can be an initial investment that pays off for years to come.
Your cost benefit: It's estimated that 90 percent of financial institution tech budgets are eaten up by maintaining legacy systems.
Paper is costly
This one probably seems like an obvious one, but you'd be surprised at how many FIs are still looking to reliance on paper when it comes to billing, statements and general marketing. And while a part of your consumer base still prefers paper statements, the easiest method of beginning to digitize your customer communications is by making paperless your default option, rather than the other way around. Make your customers opt in to paper statements - some banks and credit unions even charge a fee for it.
Your cost benefit: Aside from the obvious monetary benefit, it's estimated that going paperless increases FI productivity by nearly 40 percent.
On-demand is expected
In this day and age, having services on demand is not only appreciated, but also expected. Consumers avoid doing business with institutions that don't provide accessible services via mobile, web and apps. Digitize your onboarding and account-opening processes, as well as your customer service avenues.
Your cost benefit: Going more and more toward digital services will improve your bottom line - it's estimated that slow-to-adopt FIs see a 35 percent decrease in net profit, while those who embrace it can see as much as a 40 percent increase.
Digitization may carry with it some upfront costs - back-end development, staff training, etc. - but it's an effort that will pay off in the long run. Move your institution into the new era of banking to maintain your current customer base, build your millennial benchmarks and improve your profit margin.
Sources: Capgemini Consulting, AIIM Research, McKinsey & Company