Alkami’s Digital Sales and Service Maturity Model shows banks and credit unions how they digitally stack up against the competition. Based on research on 215 American financial institutions with at least $200 million in assets and conducted in partnership with Jim Marous and Emerald Research Group, the study places them into different tiers based on their readiness and implementation of digital strategies. It also identifies steps institutions can take to become more digitally mature.
The results in a snapshot
The study found that institutions that prioritize data utilization saw annual growth rise by 20%. One in four digitally excellent institutions has less than $500 million in assets, while one in seven of the most digitally immature ones has more than $5 billion. Seven out of 10 of the most digitally mature institutions place greater importance on digital functionality over physical branch and call center networks.
The stakes are significant. The most advanced institutions report up to twice the annual revenue growth as the least advanced. Those institutions fully deploy modern technology, are more likely to source talent outside the financial services industry and prioritize investments that improve the account holder experience.
Having a fully digital account opening isn’t enough. Only 25% have a five-minute online new account opening experience—half struggle to automate critical back office processes.
The four stages of digital maturity
Patiently Exploring (14%) is mostly smaller institutions emphasizing interaction over technology. Instead of working with third-party providers, they rely on their solutions. Such institutions are set apart by their customer-first mindset and value high-touch, in-person experiences. This group is slower to adopt advanced capabilities.
The Innovation Ready (39%) are primarily mid-sized organizations beginning to invest in technology. Their technology prioritizes user experience over advanced functionality and features a robust user interface. Next on their to-do list is the new customer experience – shortening account setup times and adding more ways to shop for products.
Digital Forward institutions (38%) are more digitally mature and have heavily invested in technology. Understanding technology’s value for a long time, they have automated many back-end processes. Their account setup experiences rank high for new and existing customers alike. They strive to be a truly data-driven organization that leverages modern technologies.
The Data-First institutions (9%) have fully embraced a data-driven mindset. They intensely focus on results and use data for nearly every decision.
Developing a digital-first mindset
Their mindset is crucial. Data-firsters consider technology a significant advantage. They push their vendors to enhance their capabilities if they are not building in-house solutions. Often larger, full-service institutions, they look beyond banking for top talent. A key differentiator is their access to data, capability in leveraging it, and openness to change.
Those wishing to move up the digital ladder should consider the following steps:
- Prioritize investments in customer experience technology;
- Actually invest money and time, don’t just talk about it;
- Prioritize customer-facing digital channels over legacy physical infrastructure;
- Shift culture from intuition-led to data-driven decision-making; and
- Implement modern data infrastructurelike integration, enrichment, and predictive models/AI.
Bigger doesn’t always mean better. Many smaller institutions excel with a fraction of the resources of larger ones by pursuing key markers like customer-centric digital account opening on mobile devices, future-ready back-office automation, and data modernity.
Understanding the importance of the corporate digital philosophy
Chief marketing officer Allison Cerra said Alkami’s goals began with establishing a digital benchmark for American financial institutions. They also wanted to understand differences in culture and investment philosophies.
“We wanted to understand better the complexity of these FIs, not just in the way of their tech stack and capabilities, but also in their belief system, and their investment priorities in how they even recruit and hire talent,” Cerra said. “We wanted a more fully encompassing view to understand how they would lay out on this curve.”
Cerra explained that progressive financial institutions efforts are reflected in more mobile and digital account openings, particularly for new accounts. The most advanced institutions have modernized data architectures like lakes and predictive models. They imbue data in most decisions.
“They’re much more likely to say they rely on data rather than their own experience in making decisions,” she said. “They’re much more likely to say they’re results-driven than something like ‘friendly’.
“You start to separate them in the tech stack but also in the mindset they use when they talk about how important data is in what they measure and report on.”
That mindset readily embraces technology, digital experiences and data extrapolation. Like many early adopters, they’re willing to try technology instead of waiting to see the benefits. Such companies monitor their app store ratings and hire from outside the industry to access different talents and philosophies.
Cerra said more people from younger generations see finance as a way to help communities. They also want to learn more about personal financial management after their experiences during the recession. Many younger generations see getting a job at a financial institution as a wise career move.
Bigger doesn’t always mean better
The bigger often aren’t better. Two-thirds of the bottom quartile are institutions with at least $5 billion in assets. Cerra said they are often aware of their shortcomings but are held back by cultural and toolset issues.
She contrasts that finding with the many smaller, advanced institutions. They intensely analyze their internal culture. They push vendors.
The best of the best develop scorecards alongside the vendors in strategic meetings so they can better understand at the highest levels the strategies needed to excel digitally. That progressive attitude reached the C-suite.
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