Finserv Glossary

Digital Transformation

What is Digital Transformation?

Digital transformation is about creating a “digital-first” mindset throughout marketing operations, according to which defines it as the process of transitioning an organization’s operations to completely digital systems to better meet brand and customer needs. Throughout this process, digital technologies become infused throughout the brand’s core strategy, allowing marketing, sales, product, customer service, operations, and finance teams to work together more effectively and provide more engaging products, services, and customer experiences.

The strategy has seen significant acceleration during the COVID-19 pandemic, notes, as homebound or socially distancing consumers became increasingly focused on accessing information and services digitally. Businesses have been forced to embrace digital transformation efforts and learn how to deliver value to customers who can only be reached online. Digital-first businesses that thrived during the pandemic offered seamless customer journeys despite the many fragmented channels that their customers use.

Key drivers of digital transformation include organizational changes, changing customer behavior, and expectations, marketing automation, and the adoption of automation platform technology, especially within the financial services industry.

Marketers, in particular, need to align strategies and operations with these transformation efforts to keep up with changing customer expectations and demands. Marketing technologies are a key driver of digital transformation, empowering marketers to facilitate seamless digital interactions with customers. 

Digital transformation investments are forecast to reach $6.8 trillion by 2023 and grow at a 15.5% compound annual growth rate (CAGR), according to technology research firm International Data Corporation (IDC) in its 2021 Worldwide Digital Transformation Report. Further, IDC projects that 75% of all global organizations will have a comprehensive digital transformation roadmap.

Organizations that have embraced digital transformation have experienced a number of tangible business benefits, notes, including:

  • Greater operational efficiency.
  • Higher levels of revenue.
  • Improved new product quality.
  • Stronger network infrastructures.
  • Reduced costs.
  • Higher marketing ROI

Each of these digital transformation benefits contributes to better data governance, as well as compliance with government regulations, such as GDPR and CCPA, which are meant to safeguard consumer privacy, as well as an increase in customer trust and engagement.

In banking, digital transformation has been a focal point for the industry post-pandemic. Reinforcing the vital role of digital transformation in banking, International Banker reporter, John Manning reported the following in a March 2022 article.

“2020 prompted much wider and more rapid consumer adoption of digital banking, and this represents a valuable opportunity for middle-market financial institutions,” Bill Topel, digital financial services leader at BDO, noted in the US bank’s recently published “2021 Financial Services Digital Transformation Survey”. “Implementing a digital strategy can help them get closer to their customers and tap new revenue and business models that will yield lasting benefits.” The survey polled 100 C-suite executives at middle-market banks, credit unions, and other lending institutions, finding that most organizations had developed digital-transformation strategies and nearly half were accelerating existing plans.