By and large, banks have mastered the delivery of basic digital services, with 81 percent of consumers using their banks’ channels in some form or other, according to Oracle’s New Digital Demand in Retail Banking survey. While customers report that they’re generally very satisfied with these basic services, their experiences with more complex banking services fall short.

Here’s what that means: One third of customers are looking at alternatives to retail banks for personal loans and mortgages. To fend off increasingly popular fintechs and challenger banks, traditional banks must improve services at every stage of the customer financial lifecycle.

Today’s consumers expect a robust, highly personalized digital baking experience. The Oracle survey of 5,200 global consumers found that 69 percent want their entire financial lifecycle on digital channels.

Yet as customers move across that lifecycle—from simpler transactions such as opening a bank account to more complex ones like applying for a loan—satisfaction deteriorates. A lack of digital integration and processes means banks miss valuable opportunities to deliver greater levels of personalization and convenience. A recent report by Digital Banking Report owner and publisher Jim Marous, released earlier this month at BAI Beacon, discusses why banks lag behind and ways they can bring their experience up to speed via technologies such as AI. (Marous discussed his findings on a recent BAI Banking Strategies podcast and will break them down further during an upcoming BAI webinar.)

‘Digital skin’ in a losing game

Consider, for example, how the initial digital shift saw banks focus on creating a “digital skin.” They released shiny new apps and websites and touted them to customers but these efforts proved mostly reactive in nature. In reality, complex and manual processes still lurk beneath the skin, particularly for more complicated transactions. That creates friction in the customer experience—and leaves them more frustrated than engaged.

Loan origination exemplifies this disjointed, impersonalized digital banking experience. While more banks are moving some of their personal loan business online, the application process largely remains paper-based. What’s more, customers are often asked for the same personal information banks have gathered about them countless times before.

This experience stands at odds with customers’ other big financial moments, such as planning a vacation, where the entire process is digitized. For example, once a consumer researches and plans a travel itinerary, they can book an entire trip online in minutes. Applying for a loan should be just as seamless. Banks must catch up and digitize age-old practices—or risk losing customers.

Advancements in machine learning and artificial intelligence will likely further transform the customer experience. For example, these technologies could help identify “micro-moments”: those personal occasions when a consumer turns to a device or channel with a deep intent based on a need to know, need to go or need to buy. These moments have potential as important inflection points in the customer journey. Banks that can identify when a customer or potential customer wants instant gratification could then deliver targeted content or a personalized offer on demand. Ultimately, this capability could strengthen a potential or existing customer relationship.

While these technologies remain in the early stages, banks still have plenty of ways to improve their digital customer lifecycle today.

The call to action: Three digital transformation strategies

Banks that accelerate towards complete process digitization by creating a seamless lifecycle will secure a competitive advantage—not just against traditional competitors but also the growing number of alternative banks. By embracing the below strategies, banks will embark on the path to deliver value and consistency in services and experiences that consumers demand.

1. Adopt a progressive approach to platform modernization. Today, digital and cloud-first players disrupt the banking industry and threaten traditional banks that fail to keep up with the digital revolution. For banks to survive, let alone remain competitive, they must address the “elephant in the room” and update their banking platforms. Banks can no longer run on core processes and systems that are 60 years old: installed in the heyday of Elvis Presley and rocket-fin cars. The growing availability of cloud-ready platforms and flexible, open architecture gives banks new avenues to deploy a truly modern core architecture and still manage risk. After modernizing core systems, banks must also work to seamlessly integrate transactional and analytical applications. These updates will enable them to maximize their data and drive future improvements and initiatives.

2. Tap into the digital ecosystem for innovation and relevancy. Customers increasingly “bank on demand,” using apps to transact instead of their bank’s website or visiting a physical branch. This reflects consumers’ broader transition and preference for the digital ecosystem. To stay relevant to customers in the long term, banks need to join the digital ecosystem. For instance, partnering with a real-estate app allows a bank to offer an “in-app loan application” as a customer searches for homes.

3. Act like a tech business. Today every company, no matter the product or service, relies on technology. Banks must embrace a “tech business mindset”: that is, evaluate existing business processes that inform each customer interaction and how those could be disrupted. For example, what unnecessary, outdated customer steps can banks eliminate across channels? How can customer experiences be better digitized end-to-end? How can banks better leverage data for a richer experience and stronger product service and delivery? By establishing benchmarks around services such as delivering a personal loan, or pre-qualifying existing customers at the point of purchase, banks can demonstrate continual improvement.

It’s time for banks to move beyond digital basics and adopt a holistic approach to digital transformation. Fortunately, banks that embark on the next digital shift can benefit from the experience of other industries; tap into an expanding ecosystem of potential digital partners; and leverage cloud-ready solutions that support rapid modernization. To emerge as powerful and customer-friendly, the digital skin of the past needs the high-tech muscle of today.

Sonny Singh is senior vice president and general manager for Oracle Financial Services’ Global Business Unit.

Want to hear more from Sonny? Check out his recent appearance on the BAI Banking Strategies podcast.

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