Three Keys to Successful Digitization in Transaction Banking

Never in the history of the payments industry has there been such upheaval. Digital technologies are upsetting the competitive order and the roles that payments play in the operations of businesses and in the lives of consumers. Yet these same disruptions are also creating tremendous opportunity for banks that can quickly adapt their long-term business strategies.

There are three steps banks can take to ensure success during the next phase of transaction banking:

1. Leverage checking and payments to build relationships. Digital transaction banking provides a platform to increase interactions with customers and offer more value. Such interactions, which might include offering targeted deals or geographically specific promotions, can increase customer satisfaction and strengthen the bank’s brand.
2. Identify digital initiatives worth investment. Technology companies are driving payment innovations at a fast pace. To keep up, banks need a way to determine which initiatives are worth investing in. Banks should ask three questions: What will be the impact on bank revenues and profits? Will it scale? Does it provide value to consumers and merchants?
3. Conduct smart experiments. There is little doubt that the next ten years will bring massive changes in payments technology. Who the winners and losers will ultimately be remains unknown. The best bet for banks is to develop a portfolio of initiatives—some solo efforts and some in partnership with other companies. That way, they’ll be well positioned when it becomes clear which direction digital transaction banking will take and which strategies will be the most profitable.