Banking Digital Transformation Survey Reveals 5 Trends

The news: Digital transformation is a major part of the short-term strategies of banks and credit unions. A new report from cloud-based digital banking provider Alkami Technology highlights five trends banks and credit unions should be aware of as they evolve digitally.

The Trends Driving the Digital Banking Landscape report is based on a survey of executives from 152 banks and credit unions.

Key statistics: The COVID-19 pandemic has accelerated the focus of banks and credit unions on digital transformation strategies. But the report shows that many financial institutions (FIs) still have a long way to go before their digital upgrades are complete.

• On a scale of 0 to 100, the average respondent ranked the progress of their digital transformation journey as 58.
• When asked which digital features their customers asked the most, 73% said digital account opening, 63% said loan requests and 59% said peer-to-peer payments.
• When asked what the biggest challenges were digital transformation, participants cited legacy systems (68%), organizational resistance to change (51%) and lack of digital literacy (41%), as the main factors.

Five trends: Responses from participants revealed a range of themes in digital banking that can inform FIs’ short- and long-term plans for digital transformation.

1. Contactless and cashless payments and transactions become the norm: Change has been in the works for some time, but the pandemic has accelerated the movement.

• 60% of respondents said cashless transactions increased by 20% or more at their institution over the past two years.

2. Major financial institutions are adopting cryptocurrency, albeit slowly: Banks recognize that digital currencies will continue to grow in popularity and they are taking steps to become the bridge between the traditional banking world and the digital currency space.

• Only 21% of respondents said their customers request Bitcoin and crypto products.
• But 35% of banks believe that offering such products will give them a competitive advantage.

3. Banks compete with fintechs. Some are partners: FIs recognize the impact fintech companies have on customers, and some believe that partnering with companies will help them stay relevant.

• 73% of the total population trust financial institutions with their personal information, according at The Financial Mark. But fintechs aren’t far behind, with 63% saying they trust companies with their information.
• 50% of banks and 40% of credit unions have partnered with a fintech company over the past three years due to competitive pressure.