Digital transformation has been a buzzword for over a decade – but what exactly does it mean? The phrase “digital transformation” describes the use of cutting-edge digital technology to improve organizational efficiency. Companies can apply technical solutions to modernize and streamline operations across multiple business functions (e.g., marketing, finance, operations) and many initiatives tap into a broad range of technologies (data analytics, artificial intelligence (AI), cloud computing, etc). Digital transformation is a crucial strategy to remain competitive and increase profitability in today’s global marketplace.
A study by consultancy firm Capgemini found that 87% of businesses believe that digital transformation provides the opportunity to gain a competitive advantage in the marketplace.1 Let’s delve into the benefits of digital transformation to find out why.
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Digital transformation provides an extraordinary opportunity for financial companies. However, those same companies may face obstacles that delay the usage and leveraging of data. Among these issues are:
Lack of policies and procedures: Many finance companies have grown as a result of acquisitions, meaning that the integration of systems and policies is challenging. The data-driven finance company needs:
Cultural and organizational roadblocks: A finance company that wants to be successful using data in new ways must address:
Technological Barriers: Technology is a common barrier or leveraging data. Challenges include:
A recent study by management consulting firm McKinsey & Company found that data-driven companies are: 23 times more likely to outperform competitors in acquiring new customers, 19 times more likely to achieve above-average profitability, and 15 times more likely to deliver better value to their customers.5 Simply put – organizations need to adopt a pro-data mentality across the entire enterprise. This means brands must prioritize investing in reliable data, services, and technologies that facilitate their ability to generate insights across departments.
Brand Example: TransUnion creates a culture of data to improve customer experience
TransUnion, a consumer credit reporting agency, is one of the top 3 credit bureaus in the United States and delivers credit reports to over 45,000 businesses and 500 million customers.
TransUnion collects and maintains individuals’ credit information and supplies it to various firms in the form of credit reports. As their customer database grew, TransUnion outgrew traditional database management systems. TransUnion decided to implement a ‘culture of data.’ The company placed an emphasis on the value of data to improve decision-making and invested in clean data and technologies to support it. Doing this allowed TransUnion to offer market insights directly to their customer, which improved customer experience.6
Studies have shown that increasing customer retention by 5% can result in a 25% increase in revenue.7 Collecting relevant data and having the technology to analyze it is the best way to guide improvements to customer experience that boost retention. For example, collecting feedback can provide insights on where customers are experiencing frustration with a product or purchase flow. This information can direct a brand’s efforts and help them tweak their offerings where they make the biggest impact on customer satisfaction. Brands should keep in mind that different target audiences have different needs and brands shouldn’t take a cookie cutter approach to the customer journey.
Brand Example: Simple Finance uses personalized content to keep younger consumers engaged
Delivering highly relevant content to your audiences will keep them engaged with your brand and foster a sense of loyalty. For example, finance companies could create a personalized financial literacy series on topics such as debt management, saving for college, or saving for retirement. Online banking brand, Simple Finance, created this email specifically for younger consumers, with content and product information selected for this audience. With the right technology, the brand could create corresponding campaigns across other audience segments, instantly, by automating content blocks that are dynamically populated based on audience attributes (age, product use, interests, etc.)
Many organizations employ artificial intelligence (AI) during their digital transformation – including implementing AI technology to build consumer profiles and expand their audience. A customer profile is a compilation of demographic, geographic, and psychographic characteristics, along with buying patterns, credit, and purchase history. AI tools are incredibly efficient at analyzing large datasets to provide marketers with insights into a prospect’s habits, spending motives, behaviors and common questions. This allows marketers to home in on the best products, messaging, channel and time of day to reach their target consumer. During a digital transformation, companies may also find that these improved insights into their customer base help identify new segments in need of their services.
Brand Example: ATB Financial identifies a new segment for an existing product
ATB Financial ran an analysis of their customer database to help them identify a key audience segment for their prepaid Mastercard product. They discovered a good segment to target for this product was younger customers. They developed the following campaign to target consumers between the ages of 17-19, who do not currently use the prepaid credit card product. In addition to the Load & Go product, the bank highlighted their mobile app and mobile payment capabilities that are perfect for young consumers on the move.
An IDC survey8 of 2,000 global companies revealed that two-thirds of CEOs will shift their focus from traditional, offline strategies to more modern digital strategies to improve the customer experience. As more brands focus on enhancing their customer experience, any organization that isn’t using data to provide a personalized customer experience will be left in the dust. Analyzing data to gain insights into your customers’ behaviors, preferences, and values allows organizations to personalize messaging and tailor the customer experience to appeal to their target audience and understand the customer journey.
Brand Example: American Express sends customers personalized videos to increase engagement
Personalization is a key part of American Express’ business model, for both B2B and B2C customers. Harry Mole, Director of Marketing at American Express UK stated, ”We’re empowering much deeper personalization at a company level.”9 For their B2C customers, this commitment to personalization took the form of personalized videos that accompanied credit card statements every month. The video helps customers learn new ways to manage their account, shares financial tips and tricks as well as newly available rewards to help consumers maximize the benefits of their American Express account.
Since American Express started to emphasize personalization, they have seen a 3X increase in marketing conversion rates and a 6X reduction in the cost of acquiring new customers.10
Digital transformation offers a competitive advantage for financial companies that are able to develop a concrete plan, execute and invest in the right data and supporting technologies. Creating a culture of data will support the use of advanced artificial intelligence and machine learning applications. This will allow companies to target the right audience with the right messaging at the right time and lead to increased engagement, conversions and provide an excellent customer experience.
1 https://www.xperience-group.com/digital-transformation-benefits/ 2 https://www.bdo.com/insights/industries/financial-services/digital-transformation-in-financial-services 3 https://www.statista.com/topics/4481/personalized-marketing/ 4 https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/accelerating-the-digitization-of-business-processes 5 https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/five-facts-how-customer-analytics-boosts-corporate-performance 6 https://medium.com/@ganuj9366/big-data-in-finance-data-is-the-new-currency-3-amazing-case-studies-93eaac3dcb 7 http://www2.bain.com/Images/BB_Prescription_cutting_costs.pdf 8 https://www.seagate.com/files/www-content/our-story/trends/files/idc-seagate-dataage-whitepaper.pdf 9 https://www.prnewswire.com/news-releases/growth-intelligence–american-express-push-the-boundaries-of-personalisation-in-b2b-marketing-300973929.html 10 https://www.prnewswire.com/news-releases/growth-intelligence–american-express-push-the-boundaries-of-personalisation-in-b2b-marketing-300973929.html
As Content Marketing Manager, Natasia is responsible for helping strategize, produce and execute Data Axle's content. With a passion for writing and an enthusiasm for data management and technology, Natasia creates content that is designed to deliver nuggets of wisdom to help brands and individuals elevate their data governance policies. A native New Yorker, when Natasia is not at work she can be found enjoying New York’s food scene, at one of NYC’s many museums, or at one of the city’s many parks with her two teacup yorkies.