Thought Leadership
Volatile Market? Invest in Your Financial Institution’s Digital Transformation
November 7, 2022

As economic conditions grow more volatile, financial institutions (FIs) are all wondering the same thing: how can we build resilience and maintain or grow a competitive position in these uncertain times?

In many cases, this debate centers around where to reduce spending or which projects can be put on hold as efforts and priorities are reshaped. However, seeking savings by cutting or pausing digital transformation projects can do more harm than good.

As Gartner Vice President, Alexander Bant, points out “We know.” In fact, data from previous recessions shows that companies that focused on innovation, growth strategy and mindful risk taking were able to outperform companies that focused on conservative approaches and cost-cutting.

nCino has worked with many financial institutions who were able to invest in digital transformation and implement new technology and processes, even during volatile markets and economic downturns. Here are 3 ways our partners and customers have been successful in their digital transformation journeys.

1. Be prepared to make strategic decisions quickly

Strategic technology decisions should made quickly to account for implementation and training and ramp up before major disruptions occur. To make these crucial and complex decisions quickly and effectively, organizational leaders must align their strategic goals and then have data, processes and expertise in places to help guide the necessary procurement process.

This, of course, is no small feat. To be successful, FI leaders must assess where their institution is in its digital maturity journey and then select solutions that will deliver the largest impact. For example, FIs in the early stage of digital maturity may need digital channels so their retail, small business and commercial customers can open accounts and apply for loans anywhere and at any time. Meanwhile, institutions in the middle of their digital maturity journey may be looking to drive more productivity and efficiency with automation to free up time for their relationship managers to build relationships or their loan officers to handle higher volume. Finally, an FI that is digitally mature may be seeking AI and analytics tools to better harness their data to improve decision making for their employees and customers by delivering better insights.

Some institutions may try to build digital solutions in-house, but this rarely results in digital maturity at the speed at which a volatile market demands. Working with an experienced vendor, however, can allow FIs to more rapidly make the critical changes that bring about the most impact. As Ron Shevlin, Chief Research Officer with Cornerstone Advisors states, “To achieve the level of speed and scale required to be prepared for the future, you can’t get it done without the help of partnerships.”

 

2. Focus on tech that yields the biggest benefits

There are several factors FIs should consider when selecting a solution to improve their competitive position and build resilience. Scalability, the ability to make the organization more agile and greater data democratization tend be key considerations in the beginning, but in reality, these benefits should be a given when it comes to technology. Instead, FIs should think about following:

  1. Increasing automation – Automation can help your institution to unlock greater operational efficiency, which is one of the best ways for an FI to see ROI quickly and improve resiliency. With automation, human errors (and the risks associated with them) are reduced, and productivity increases as inefficient, manual processes are automated, enabling staff to focus on higher value tasks and provide better customer experiences. Automation often reduces costs as well, while allowing organizations to scale their operations.
  1. Artificial Intelligence (AI) and Analytics for better decision making – AI and advanced analytics unlock greater value from the treasure trove of data within the financial institution by providing the tools necessary to make the best and most profitable decisions. Executives gain access to smarter reporting tools, offering greater transparency into organizational performance and more insight and data when making decisions, while employees have access to the most relevant data when they need to provide customer with the best service and advice.
  1. Improving employee and customer experience – Digital experiences are the expectation for both employees and customers. Digital channels should provide both groups with greater flexibility, transparency, and streamlined process management. Often, this starts with digital channels. For example, a digital deposit account opening solution can simplify and accelerate onboarding for customers while reducing fraud by 50%, reducing manual reviews by 98%, and authenticating accounts in as little as seven seconds. This creates an exceptional and quick experience for customers expecting simple and fast banking services. On the commercial side, something like an embedded pricing and profitability solution can reduce the time it takes lenders to structure and price deals from hours to minutes and allows them to confidently negotiate in real-time— giving them back time to focus on growing relationships.

 

3. Consider the cloud when it comes to investment and implementation

With 52% of executives in agreement that “there is a growing divide between where their business is and where it needs to be to compete,” the time for smart technology investment is now. Time, however, is a key consideration, especially considering how long due diligence and implementation can take. One solution to this problem is cloud migration, which provides companies with the ability to be more agile and scalable without ongoing maintenance costs.

There are many ways FIs can conduct a cloud migration without embarking on an upgrade to a cloud core. By connecting existing core technology to a cloud banking platform, FIs can see significant improvements and reap the benefits of cloud technology more quickly and efficiently. This approach also allows them to revisit a core transformation during more stable times in their business without falling behind their competition.

A cloud-based banking platform allows organizations to improve specific workflows and key processes in their business such as onboarding, account opening, loan origination, and more to get immediate and long-term return. As Ron Shelvin notes in an interview with Financial Brand, “The FIs that have done the best job so far of providing digital account opening and digital banking capabilities go into a downturn in the economy on a stronger set of legs because they’ve dealt with some of the efficiency and effectiveness issues around delivery.”

 

Ready to learn more?

The best approach to handle economic uncertainty for your institution is not by pulling back on technology investment and spending, but by having a proactive mindset. By understanding where your institution can gain the most and making strategic investments in those areas, you can ensure the best results.

The best part is that you don’t have to do it alone. To learn how nCino can help your financial institution deliver meaningful, timely, and transformative results, schedule a demo today.

  • Digital Transformation