Financial Services

Six Stages of Digital Transformation for Financial Institutions

Many financial institutions have been around for decades. They’ve successfully implemented the technology advances necessary to stay relevant, such as using the latest core systems and implementing digital banking services for their customers. However, the journey to a complete digital transformation involves both technical changes as well as strategic and organizational changes. To truly embrace technology and prepare for the future, each financial organization must embark on a multi-phase process to reach their full potential. We have outlined the six stages of this transformation to give banks and credit unions a high-level roadmap of what needs to occur in order to realize a complete digital transformation.

1 | Business as Usual

In the first stage of digital transformation, banks and credit unions are still maintaining the status quo rather than experimenting with new digital initiatives. Some are still hosting their business applications internally and are spending significant amounts of time performing required compliance audits. They manually compile reports using pivot tables in Excel or other spreadsheet programs. While each department has its own reports, there is little to no aggregation of data across multiple departments; only a manually created deck assembled and shared once a month. This means that they are limited to basic reporting metrics rather than deep analytics.

While they may discover some insights in their current data metrics, the insights that are gleaned from these manual reports may not be easily acted upon. Small projects may be taken on by individual departments, but there are no formal processes, and these projects are largely siloed from one another. Many times, the IT department “owns” the digital initiatives, and they tend to be tech-first rather than customer-first. Therefore, organizations are unlikely to see any significant outcomes from the small, one-off projects that are taking place during this stage, and they do not drive the overall business strategy.

2 | Present & Active

As the technology landscape evolves, it can be easy to get excited about new products and services that promise to revolutionize the field. But many banks and credit unions are not ready to go all-in until these claims are tested. Oftentimes, an experimental pilot project will get off the ground within one department. For example, they may start pulling new operational reports out of their core banking system, utilize very basic customer segmentation for a marketing campaign, or consider moving to a cloud-based system to host some of their internal applications.

However, their data continues to be siloed, insights and best practices around new technology initiatives are not shared throughout the organization, and there is little to no executive-level involvement. However, for most banks and credit unions, dabbling in new strategies and technologies is the first step to creating a sense of excitement and building a case for digital transformation on a larger scale.

3 | Formalized

As banks and credit unions begin to see momentum build from existing pilot programs, it is increasingly easier to justify investments into new digital initiatives. In the past, marketing, customer care, and transaction core databases had been siloed; separate reporting for each was the norm. However, in the pursuit of digital transformation, moving internal applications to the cloud is an important milestone on the path to creating a single source of truth and making data accessible across the enterprise.

At this stage, a clearer path toward digital transformation emerges for the bank or credit union. More formalized experimentation begins, including greater collaboration between departments and the involvement of executive sponsors. The development of technology roadmaps, including plans to move systems to the cloud and expand internal or external managed IT and security services, ensures that the bank is strategically positioned to advance its digital initiatives.

4 | Strategic

The pace really picks up in the next stage as collaboration across business units increases and the C-suite becomes fully engaged in the digital transformation process. This allows banks and credit unions to focus on long-term strategy by putting together a multi-year roadmap for digital efforts. This is the stage where an omni-channel approach to the customer journey becomes realistic, leading to a unified customer experience across all touch points—both physical and digital. Technology is no longer implemented for the sake of an upgrade, but rather, to solve specific business challenges.

However, some challenges may present themselves at this stage. As data is more freely accessible, the quality and accuracy of the data itself may be called into question. This accentuates the need for a strategic data governance plan for the bank or credit union as a whole.

5 | Converged

Once digital champions have permeated both the executive team and the majority of business units, it becomes necessary to create a governing body or “Center of Excellence” focused specifically on digital transformation initiatives and data governance across the company. This structure eliminates repetitive tasks and roles, and allows for a unified roadmap, shared best practices, and the development of a single bank-wide digital culture and vision.

Banks and credit unions can further refine their omni-channel approach to optimizing the customer experience by creating customer journey maps for each segment. This leads to optimization of every touchpoint along the way, both digital and traditional, and informs the overall business strategy. Marketing can start to run and track highly personalized campaigns for current customers and new customers.

At this point, one-off tools are abandoned in favor of an all-encompassing cloud analytics platform to gather, house, join, and clean data in order to deliver relevant, up-to-date insights. All employees are trained on digital strategy, and new hires are screened for their ability to contribute in a digitally transformed environment. In the Converged stage, digital transformation touches every aspect of the business.

6 | Innovative & Adaptive

The final stage of the digital transformation journey can be defined by continued experimentation and innovation, which, by now, is a part of the organization’s DNA. Investment in the right people, processes, and platforms optimize both customer and employee experiences, as well as operations of the bank or credit union as a whole.

Through the Center of Excellence group, pilot projects are tested, measured, and rolled out, providing a continuous stream of innovation. The data, reporting, and analytics capabilities of the omni-channel cloud analytics platform are integrated across every department, spreading from Marketing into Sales, Service, and HR, among others. Full personalization of marketing campaigns target customers that have triggers in their checking, mortgage, or wealth management accounts, or through actions taken via customer care or app. This allows the bank or credit union to make relevant recommendations on products such as loans, refi, wealth, etc.

Training programs are set up to bring all employees up to speed on the iteration and innovation cycle, and HR is closely involved in filling the talent gaps. Financial institutions may partner with or invest in startups to further advance their technology and innovation initiatives.


By embracing new technologies and setting up the processes necessary for a complete digital transformation, banks and credit unions are able to personalize the customer experience, enhance and streamline operations, and stay nimble in the face of changing times. No matter where your organization currently falls on this journey, your partners at Aunalytics will help you reach your ultimate goals by providing technology, people, and processes that can take your bank or credit union to the next level.

This article was inspired by research by Altimeter, as summarized in “The Six Stages of Digital Transformation” which can be downloaded here.