Digital Transformation in Retail Banks: Potential Impact on Brand Equity, Customers, and Employees


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Discussion of the myriad and varied ramifications of Digital Transformation is, seemingly, everywhere (and unavoidable). I’m capitalizing the first letter of each word because the pervasiveness of digital transformation has all the feel of Big Data a few years ago and Reeingineering in the 1990’s.

All things digital and innovative, especially mobile access and communication, is now consuming both attention and resources at many organizations. It is having most impact, and will likely continue to do so, in traditional industries such as retail banking. Digital innovation in banking can be seen in the transformative way people transact and organize their finances. It is also impacting financial service cultures, as it forces banks to shift from a largely product-centric perspective to a customer-centric one.

For banks, digital self-service depends on situations where the customer:

  • Is already using a mobile device (which have become pretty pervasive, even ubiquitous among many demographic groups)
  • Can act in real time, responding to advertising or incentives
  • Needs a bank’s product to support their activities (home purchasing, auto loans, etc.)

Banking is rapidly becoming “anytime and anywhere” omni-channel, as tech-enabled and tech-smart customers have driven the need for more experience flexibility and more innovation. At the same time, digital transformation has directly influenced how banks learn about, develop relationships, protect the security, and, in general, provide value to customers. Let’s begin there.


Customers want seamless, convenient banking experiences, irrespective of channels or when they are used. And, they prefer to co-create the services desired. In this regard, banks must understand both stated and unstated (subconscious and emotional) needs, likes and dislikes. Whether the experience involves exploring services, opening an account, checking balances, getting loans, wealth management, or customer support, superior omni-channel effectiveness has become a performance ‘must-have’.

Major digital trends for customers include mobile payments, services on multiple device types, automated account origination (recognizing that there must be a balance between risk tolerance and convenience), personalized marketing and promotional offers, and individualized management tools. Much of the digital transformation emphasis has been on technology (big data analytics and cloud, mobile apps, etc.) One closely related consequence of these experience and technological transformation trends is that they are fundamentally changing the roles of bank branches, and the role(s) of branch employees.


Some banks, especially among the major national and regional players, have made closing or selling branches a key strategy. Others, recognizing the brand equity and perceived value signals this sends, have gone in a more customer-centric direction with branches. Structural models need to be re-thought, as do staff skills, hiring practices, training, and incentives. At the branch level, for instance, employees are building new capabilities, evolving and being repurposed from reactive service providers to become customer interface agents and counselors.

They are training for roles as skilled “community bankers” and relationship managers, who, armed with tablets and smart phones, guide customers as they navigate through digital channel options and services and, at the same time, perform processing and security checking. Individual customer data available to employees can help them interface, as well, and provide more streamlined digital experiences as customers use bank tools and services.

Brand Equity

For banks, through this time of digital innovation and enhanced customer connectivity, the names of the game remain trust creation (or rebuilding), at the experience and memory level and improving the customer journey. Internally, banks are having to move beyond traditional thinking (such as viewing digital transformation simply as stand-alone front-end features like mobile apps), and legacy systems and processes, built up over decades, to become more agile. In the competitive arena, for example, banks are now competing with fintech startups, specialists in providing the latest in consumer digital services.

Consumer expectations seem not to distinguish by type of product or service vendor, and part of digital transformation is that customers want their banking experiences to be similar to those delivered by other industries. A reality is that, with fewer branch, or even telephone, interactions, delivering consistently positive customer experiences will be a key challenge. The leveraging of customer data and targeted research, and payments channel partnerships with blockchain companies such as PayPal and Square to deliver more personalized experiences, will be essential here. Above all, differentiated and positively perceived digital financial service experiences which can be smoothly embedded in the customer’s lifestyle, with a customer-centric culture and enhanced processes to support them, will shape bank image and reputation.

Digital transformation has created a powerful intersection for banks: omni-channel interaction, customer and employee experience, brand perception, and enterprise culture. An omni-channel, customer-centric strategy melds offline and online access, information technology, and customer behavior – ideally, managed through a single overarching platform.

As a concept, digital transformation isn’t particularly new; but, banks have been more reserved in implementing it due to the costs of technological upgrades, historical operating silos between branches and online services, and holistic decisions regarding overall goals and evolving brand perceptions. They need a reset – in long-term vision, flexibility of operational models, changes in IT, new product and service development, and greater time-to-market deployment focus – to stay ahead of changing customer needs. Banks, indeed all financial institutions, are faced with a three-element set of challenges and opportunities:

  • Create a “human bank” in an increasingly digital world
  • Protect, and defend, brand equity, to emphasize digital capabilities which enhance perceived customer value
  • Migrate employees, and support them, in their evolution as customer agents and counselors
Next month, we will be addressing many of these key digital transformation issues in a special webinar.


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