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Digital Transformation Tips for Banks and Financial Institutes

Digitalization is taking over every industry, and banking is no exception. To deliver a customer-centric, fast, and efficient service, banks must go through their digital transformation, keeping some key points in mind.

It is essential to consider that banking is an industry that requires highly adaptable solutions. That's because the financial sector must be able to respond to the rapid and unexpected changes in today's world - just like COVID-19 in 2020.

Automated banking services and RPA usage in banking are on the rise for agility and better customer satisfaction.

That being said, there are specific methods that banks should apply during their digital transformation to keep it fruitful.

Low code is one of them.

Banks can leverage low-code development to cut their IT costs while being able to build digital solutions with much fewer resources. Time is money, after all.

So, let's try to answer the following questions:

  • What even is low code?
  • How can banks utilize it?
  • What are the benefits of low code for financial institutes?  

What is low code?

Low code is a development approach requiring little to no hands-on coding with traditional programming languages. Instead, it employs easy-to-use visual interfaces with tools like drag&drop, which operate on basic logic. This is possible thanks to the application programming interfaces (API) that low-code platforms offer.

In other words, while traditional programming works with text, low-code development is visual.

This gives the average Joe with problem-solving skills the opportunity to be a developer without even knowing how to program. In other words, workers from various backgrounds other than IT can contribute to the digital transformation process of a company.

And as we said, the banking industry needs this leverage a lot, which brings us to our main topic.

How can low-code help banks and financial institutes?

Here are some key areas in the digital transformation of banks where low-code development comes into play to improve digitalization in banking.

Banks can get away from the cost of legacy systems.

Many banks and financial institutes still use legacy systems unsuitable for today's world. To have an advanced infrastructure, banks must speed up their digital transformation. This can bring about two main upsides, namely, improving speed and reducing cost.

Speed: Relying on older technologies is a huge burden on banks. That's because older infrastructure prevents them from taking quick action in certain situations. Banks can implement faster and more frequent updates on their applications by using low-code solutions. Further, the legacy systems are slow, which results in a poor customer experience.

Cost: Legacy technologies are hard to sustain. Financial institutions can spend up to 70% of their IT budgets on maintaining those systems. Therefore, it is a massive burden on their budget.

Knowing full well that using older systems is damaging, banks are still hesitant to make significant changes. Moreover, as the finance industry offers no tolerance for errors, trying to take the leap might prove quite costly.

That is where banks can utilize low-code development. Employing adaptable low-code solutions is a great way to offer a better service despite the older infrastructure. In addition, they can smoothly integrate with the current processes, which minimizes the resources required.

Low code is the way for digital banking.

In today’s world, people are after practical solutions for their banking needs. Therefore, banks should emphasize offering a satisfying digital service for their customers, which should be in the scope of their digital transformation strategy.

This requires banks and financial institutions to implement state-of-the-art technologies. The tools they use must be able to generate real-time data and valuable insights that can be used for planning.

As low-code platforms utilize artificial intelligence and advanced analytics, they present an unprecedented opportunity for banks to build their applications. Banks can easily create cutting-edge applications that give real-time banking advice thanks to low code. Furthermore, they can use low code to put their prospective services to a test.

Low code is invaluable for minimizing the IT workload.

It is no secret that the workloads of IT departments increase with each passing day. In light of this, the impact of their work on the company is also on the rise. According to a study, 88% of IT leaders have reported increased workload over the last year.  

This is the case for the banking industry, too. It is no surprise as financial institutes have to keep track of constantly expanding data with more and more IT work. They need to develop new applications and upgrade the current ones to keep their customers' experiences on point.

Well, keeping up with the exponentially increasing workload is not easy. Therefore, the industry needs something extra, which is the leverage that low-code provides. IT leaders can utilize it to optimize their output.

One of the most prominent advantages of low-code development is its time efficiency. It is crazy how much low-code can do in such a short amount of time.

For instance, building an app that would normally take up to two years just took a week, thanks to low code. This example also highlights the adaptability of low-code in times of rapid change, as it shows how this technology can solve unforeseen problems.

The finance sector should work flawlessly. Therefore, it must be prepared for anything that can happen out of the blue. Using low-code solutions in times of need is a great way to do it, as it does not require much time.

Personalizing customer interactions has never been easier.

According to a survey, brands risk losing 38% of their customers due to a lack of customization. Therefore, companies from all industries must double down on offering a customized experience for their customers.

This is undoubtedly applicable to banks and financial institutes, too. Banks need a great amount of computational power to account for a huge variety of customers and give them a personalized experience.

This is why it is better to automate this process rather than having to do it manually and wasting a lot of resources.

In this context, personalization of customer experience is another area where banks can leverage low-code solutions instead of opting for more impractical ways. Thanks to low-code platforms, banks, and financial institutes can automatically personalize their customers' experiences by utilizing workflow automation and cloud-based databases.

What should banks keep in mind for digital transformation?

Despite offering an opportunity to yield positive results, such as more customer satisfaction and lower costs, a robust digital transformation process is not easy to implement. Therefore, banks and financial institutes need to have a robust plan - which is not usually the case, as only 27% of them started a digital transformation strategy in 2021.

Here are some factors banks should consider while building a digital transformation strategy.

Banks should know what they aim at.

For the digitization process to be efficient, banks should know what exactly they are trying to accomplish.

Digital transformation must offer customers a convenient experience on all fronts. This relies on their expectations of the service. Therefore, banks should analyze their customers' needs and turn their efforts toward meeting them.

Unless they devote the necessary effort to this, banks cannot achieve the desired customer retention result, which will decrease their profits.

Determining risks and costs is of utmost importance.

A successful digital transformation process is effective yet expensive. That's because there are a lot of risks associated with digital transformation, which is also the case when it comes to utilizing low-code solutions.

  • First of all, using digital platforms might give rise to unexpected data leaks, cyber-attacks, and countless other threats. So banks must make a good risk assessment to keep the system safe from those risks.
  • Another thing to keep in mind is the security risks brought about by a large number of applications built with low code. Although low-code makes it easy to develop and use applications in the nick of time, they should be supervised to ensure security.

To overcome both of the problems above, banks should determine the risk they are under and allocate the necessary resources. Unfortunately, as we mentioned before, this could prove quite costly.

This is why banks and financial institutes should minutely analyze what they're up against before building a blueprint for their digital transformation processes.

In a nutshell

When it comes to the banking industry, navigating through a digitalization process is much more challenging. Therefore, banks and financial institutes should leverage the power of low-code platforms.

This way, they can build secure and easy-to-use applications much shorter than usual. On top of that, building apps with low code is much less expensive, which leads to increased productivity and profit.

You can leverage the full power of low code with Kuika. Thanks to Kuika’s low-code development platform, banks can carry out their digital transformation process without hassle. Try it now!