Banks urged to embrace agile transformation - Legacy lenders need to dive deeper

• Published date: 08 March 2023
• Publication title: The Korea Times

Digital customer journeys are now an essential part of any modern bank's offerings, but despite this clear imperative, six out of 10 financial service companies still fail to achieve their digital transformation goals.

Boston Consulting Group (BCG) works closely with financial institutions across the Asia-Pacific region, offering valuable insights on the importance of putting customers at the heart of transformation goals. In our report, "Taking Digital Banking Beyond Customer Journeys," we explore the challenges of a truly customer-focused transformation, and the remarkable rewards financial institutions can unlock by delivering on this need.

Our extensive experience supporting financial services partners around the globe tells us that digital transformation must capture the whole customer value stream, from customer-facing, front-end experience, right through to the foundations of process operations, risk, legal and compliance and technology that are ultimately so fundamental to an effective offering. The reality is that creating an encouraging picture above the surface must be accompanied by the right foundations to support sustainable success.

There are two fundamental parts to this journey. First, financial institutions must deeply understand customer pain points and unmet needs. Second, they should deliver the solution not just to customer interfaces, but with a front-to-back, end-to-end perspective that incorporates all relevant functions and roles into one agile team.

Rise of digital banking

BCG's "Global Retail Banking" report revealed that the use of online banking had increased by 23 percent globally, and mobile banking 30 percent over the previous year. This rapid growth has created fertile conditions for ambitious, emerging digital challenger banks, with over 250 of these pioneering banks now operating globally.

Digital transformation now offers an equally powerful opportunity for legacy banks, with our experience revealing successful delivery can reduce costs by 15 percent to 20 percent, improve efficiency and reduce error rates by 20 percentage points to 40 percentage points, and improve customer satisfaction by 20 to 30 points, while delivering a two- to four-fold acceleration in the delivery of new products and services.

Customer journeys are a pivotal part of this transformation. These journeys can come in many forms, but banks' own responsibilities are broadly characterized in five ways ? helping customers open new accounts, helping them...