April 20, 2021 at 09:00AM

Digital banking has hit new highs over the past year, with one study finding that 50 percent of consumers have used digital banking apps more than they did before the pandemic.

The same study also found that 87 percent of consumers plan to continue with their increased digital engagement even after the pandemic ends, meaning that banks’ current digital investments could pay off for years to come.

Many financial institutions (FIs) are unfortunately ill-equipped to handle digital banking’s current scale, especially when it comes to the efficiency and security of their back-end systems. More than half of all banks in the United States and Canada said they lack the automation capabilities for speedy customer onboarding, for example. Cloud computing and robotic process automation (RPA) are helping banks make large strides when it comes to modernizing back-end systems and providing the digital services customers crave, but modernization challenges remain formidable.

In the April Digital-First Banking Tracker®, PYMNTS explores the latest in the world of digital-first banking, including FIs’ cutting-edge digital enhancements, the back-end changes required to execute these adaptations and how automation will make back-end and customer-facing improvements a reality.

Developments From The Digital-First Banking World

Some FIs are advancing their digital agendas with the help of artificial intelligence (AI) systems. These were commonplace before the health crisis, with one pre-pandemic survey finding that 60 percent of FIs had some AI-enabled services in either their customer-facing or back-office applications. The pandemic has pushed AI adoption to new levels, with some experts predicting it has the potential to add more than $1 trillion in value to the financial industry by 2035.

Digitization can be much easier said than done, however, especially when it comes to customer satisfaction. A survey of bank customers found that while 82 percent expect banks to understand their personal banking needs, just 38 percent said that their banks were doing so in a satisfactory manner. The top problem was communication — cited by 88 percent of respondents — but almost half of all customers also said they thought that banks were not doing well enough in syncing their in-person and digital banking experiences.

Challenges like these may be what drives a surprisingly low success rate for FIs’ digital transformation efforts. A study found that while 80 percent of banks have begun such transformations over the past few years, only 14 percent sustain any performance improvement as a result, and just 3 percent complete their digital shifts. There are several factors that lead to this high rate of attrition, including the persistence of legacy systems as well as the investments necessary to fund these initiatives and train bankers to use new systems.

For more on these and other digital-first banking news items, download this month’s Tracker.

People’s United Bank On The Back-End Improvements Necessary For Digital Transformation

Digital banking has surged in popularity, but banks can struggle to handle these new digital banking volumes if their back-end infrastructures are not up to the task.

In this month’s Feature Story, PYMNTS spoke with Ravi Vakacherla, chief transformation officer at People’s United Bank, about how the FI deployed RPA to upgrade is legacy systems and enable its digital initiatives.

Deep Dive: Improving Back-End Systems To Advance Digital Transformations

FIs are confronting unprecedented challenges during the pandemic, and the game-changing popularity of digital banking is making the financial field nearly unrecognizable. Banks are scrambling to ensure their digital offerings are on par with those of their FinTech competitors, but legacy back-end systems are severely hampering this innovation.

In this month’s Deep Dive, PYMNTS explores how banks can harness RPA and cloud technology to improve their back-end systems and amplify their digital efforts.

About The Tracker

The Digital-First Banking Tracker®, a PYMNTS and NCR Corporation collaboration, is the go-to monthly resource for updates on trends and changes in digital-first banking.

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