As organizations dealt with the effects of the global pandemic and the growing market dominance of Gen-Z, digital transformation underwent a transformation of its own. Here’s a look at what digital transformation might look like over the next five years.
To say we are living in an age of transformation is an understatement. While financial institutions (FIs) and other financial service providers are expanding the horizons of what is possible in the world of digital payments, they are also experimenting within their organizational structures. The tech industry has gone into detox mode as economies stand on the verge of global recessions. Over 150,000 employees were laid off at tech startups globally, from around 970 firms. Surprisingly, even when the disruptors are stifled, the widespread layoffs and radical changes are a sign of correction because the sector stressed hiring over the past few years.
So while things present some unprecedented challenges for IT professionals, especially in FIs and payments companies, the industry itself is thriving. But this begs the question, “What will digital transformation look like over the next five years?” The answers are as varied as they are exponential. Yet, FIs and payments companies must prepare for both the inevitable and the unexpected. If the last three years have taught us anything, it’s that the only way to stay safe is by taking risks, as with technological advancement and digital transformation, anything is possible.
Between migrating physical channels online, introducing omnichannel retail, digitizing physical stores, and adjusting the surrounding systems, processes, and procedures, FIs and payments companies have a lot on their plates. The pace of digital transformation within FinTech and financial services has already reached a breakneck pace; now the luxury of playing the waiting game has completely dissipated.
Those with 18-month to 3-year roadmaps for digital transformation found themselves scaling these initiatives in a matter of months or even weeks. Over 61% of organizations are adding new digital projects, 51% are revisiting their long-term strategic vision, while 48% are accelerating at least some, if not all, of their existing digital transformation plans. However, now the digital transformation goes way beyond the generic digitalization of payment methods. It now inculcates a seamless, preferably invisible, omnichannel payment method.
FinTechs and IT departments within larger FIs are looking for ways to increase operational efficiency, analyze large volumes of data, and garner insights from that data, especially as digital channels become the primary channels for customer engagement. However, with only 13% of channels being completely digital, as opposed to 41% of younger consumers (aged 18-54) demanding digital transformation, there is a lot yet to achieve.
As we look at what to expect in 2028, the central theme is to be bold with technology. Those slow to adopt new technologies should take lessons learned from the past three years and apply them to forward-looking initiatives to enjoy the bottom line benefits that come with early adoption.
The way digital transformation is approached and unfolds over the next five years is going to be dynamic in every sense. In order to understand what the future of digital transformation holds, it’s important to look at what trends and technologies are emerging in the world of FinTech and finance.
Touchless transactions, whether in the form of a pay first and pick later or to eliminate long waiting lines at physical stores, are a must for today’s customers. The most prominent technologies behind touchless transactions are automation and blockchain. They have revolutionized how customers and businesses interact by integrating data and insights to base communication on. This doesn’t mean that human roles in fintech and finance will disappear entirely, but rather that operational workforces may be leaner as humans move into more business-oriented and specialized roles within financial services.
In terms of customer service, 69% of consumers try to use self-service to solve as many problems as they can on their own. So it is with banking; with endless information available via smartphones and voice assistants, people will increasingly bank, make payments, get support, and utilize digital financial products to manage their own finances. Though digital solutions will need to rise to the occasion by offering automated activities and providing easily accessible, intuitive, on-demand data and insights.
Digital adoption will be a high priority in order to meet the new needs of customers living in a new normal. CXOs, VPs, and decision-makers want to understand the digital transformation trends to leverage the possible opportunities. Experts recommend several areas of opportunity to succeed in the newly transformed landscape:
Experiment: Testing and learning are the fastest paths to innovative processes and solutions. Leveraging disruption can be one way to make these tests and experiments more appealing to stakeholders.
Maintain productivity momentum: The transition to remote workforces has pushed many organizations to seek out unique ways to increase efficiency via automation. This continued even after people returned to office spaces and should never be disrupted. Continuing to invest in automation and predictive analytics will have its benefits.
Frequently review data: Data sources should be reviewed as frequently as possible to keep a finger on the pulse of dynamic customer needs as well as to garner helpful business insights
The disruption is sure to continue, and FIs and financial service providers will quickly find out if their organization and infrastructure are up to the task. Customer preferences will remain dynamic as everyone adjusts to the new normal, and a solid roadmap for digital transformation will be critical to ensuring that organizations can deliver products and solutions that meet these preferences.
Is your organization ready to navigate the ever-evolving landscape of digital transformation? Contact us today to discuss how our expertise can help your organization thrive in the next five years and beyond.
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