Can Banks Boost Their Digital Savviness?

Digital banking is among the trendy phrases dominating conversations in the banking industry. But this concept is real and has many implications for banks as they define their roles and strategies for the foreseeable future. If anything, the phrase digital banking is redundant, as banking has become a digital business, with most transactions conducted over online and mobile channels. And where analog banking still exists, it's being redefined to incorporate digital, as seen in initiatives from Citi, Wells Fargo, BBVA Compass, and other banks that are launching branch formats that incorporate mobile and video capabilities into the operations.

[Industry veteran Jeff Dennes will head BBVA Compass' newly created digital banking division; former Capital One Bank chief digital officer will serve as director of customer experiencee and business Intelligence.]

When it comes to operating as a digital enterprise, banks are among the leaders, according to PwC's sixth annual Digital IQ Survey. Businesses that can boast a high Digital IQ, the PwC research suggests, are those that demonstrate five "digital behaviors":

CEO actively champions digital. Eighty-one percent of the top performers across all industries in the study say their CEO is an active champion in the use of IT to achieve business strategy.

Strong CIO-CMO relationship. Seventy percent of top-performing companies say they have a strong CIO-CMO relationship.

Outside-in approach to digital innovation. Top performers supplement the traditional internal sources of innovation with outside sources such as universities, labs, analysts, and vendors, according to PwC.

Significant "New IT" platform investments. PwC defines "New IT" as processes, architecture, organization, and governance, with IT evolving into a "services orchestrator" instead of a centralized authority.

View digital as an enterprise capability. "Digitally savvy resources" must be woven throughout the business, not centralized in a single function.

The fifth behavior is a reminder that digital will define the ways employees work and the ways customers receive payments, services, and communications. It's about building a culture and sense of mission, not implementing a project.

Banking's transformation into a digital business has been sped by mobile technology -- not just mobile banking and payments, but mobile as a ubiquitous business tool. As BS&T associate editor Bryan Yurcan reported in a recent digital issue, the challenge now is to figure out what's next for mobile banking in terms of customer expectations and technical capabilities.

And although so far US banks have been mostly on the sidelines of mobile commerce, they are on the front lines of the battle to secure payments, regardless of channel. BS&T associate editor Jon Camhi recently identified efforts banks must make now to fight the growing scourge of payments fraud.

It's clear that achieving digital savviness requires significant investments in technology, major mind-set changes, and process transformation. It can't just be lip service.

[Enabling the shift to digital banking is a key requirement for today's bank technology executives, and some already are posting significant successes. Do you know a CIO or line-of-business exec who is successfully leading this kind of transformation? Nominate that executive for Bank Systems & Technology's 2014 Elite 8 awards. The October 2014 report will identify and profile some of the most innovative and effective tech executives in banking. Nomination deadline is June 6, 2014.]

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio