The Road to Digital Transformation – Key Steps for a Successful Journey

  • By Andrew Starke

Many banks have already started the journey towards becoming true, multidimensional digital organizations. But this journey can look overwhelming at the start and may have many twists and turns along the way, says Nicholle Lindner, Industry Director, Financial Services Asia Pacific, Unisys.

ONE OF THE most quoted of all Chinese philosophers is Lao Tzu. He wrote “Do the difficult things while they are easy and do the great things while they are small. The journey of a thousand miles begins with a single step”.

For financial institutions this advice is incredibly on point as they look ahead to the transformative journey towards successfully becoming true, multidimensional digital organizations. This journey can look overwhelming at the start, and will require strategic decisions to be made quickly and ahead of time, with little certainty about the road ahead. For those banks that have already started, the road to digital transformation will be a long one and have many twists and turns along the way.

As we have seen recently, even some of the most well established banks and financial institutions can become disoriented and drift off course as the market becomes less predictable and industry disruption and technological change increases. However to stand still and not begin the digital banking journey, or not continue to reposition your strategic compass regularly, will mean failure is inevitable.

In my experience being part of major transformational change programs at several large banking institutions, it became apparent that identifying the critical success factors upfront at the start of the journey was by far the best option. Whether developing the strategy for a new digital bank under the banner of a much larger bank (such as UBank at NAB) or developing the strategy for the rebirth of a former bank brand within an existing Tier 1 bank (Bank of Melbourne within the Westpac Group); it became clear to me that when it comes to launching a new bank (virtual or bricks and mortar), preparation and identification of the critical steps ahead of time is a non-negotiable.

“It became clear to me that when it comes to launching a new bank, preparation and identification of the critical steps ahead of time is a non-negotiable.”

Therefore the questions banks must answer now are:
• What must we do to prepare for this digital journey?
• What do we need to take with us; and
• What should we leave behind?
To answer the first question; banks must look, learn and listen both inwardly and outwardly. Never before has it been so important to know what is happening around us so we may leverage both global and local market trends. This means not just looking at what’s happening in your known competitors but also watching for developments amongst new entrants (new digital banks, payment companies and alternative lenders), potential challengers (Amazon, Google, etc) and FinTech startups.

Back inside the organization, banks must have an unwavering focus on their target segment(s), and understanding their needs to ensure take up of new digital products and services. It will also help to manage any cannibalization risks. In terms of being aware of what is happening both outside and inside the bank, the digital banking CVP must also be strong, unique in the market and be able to evolve over time.

In terms of the kit bag of essentials banks need on their digital banking journey (and there can be no allowance for excess baggage!) it’s all about establishing and keeping the right mindset. Banks need to continue to have a relentless focus on their customers and the human journey they are making through various life stages. This means placing the customer experience at the very center of the digital design and inserting the customer preferences into every supporting interaction.

Banks are also trusted custodians of their customers’ identities and transaction histories. This means a sustained focus on risk management to mitigate both internal and external threats. By continuing to invest in new technologies and tools supporting secure cloud and physical data storage, KYC, Analytics and Cyber Security banks will keep their customers secure – and protect their greatest asset.

So, what do banks need to discard on this journey? This question will force some of the most difficult choices of all. To put it simply, banks cannot assume they can migrate their legacy IT core systems and processes into the new business model without significant changes. Becoming a true digital organization requires letting go of existing architecture and investing in new methods of working: new ecosystems and front end interfaces, cross-platform data sharing and re-designing processes to support the customer and not the internal workings of the bank.

Being held back by siloed, legacy systems which do not enable a single view of the customer digitally is a certain path to irrelevance. Similarly, old style behaviors based on siloed channels and product ownership is also a heavy burden to carry. Banks must be rapidly adopting new working methods (Agile, Design Thinking) and organizational structures that enable an Omni channel experience that is device agnostic wherever and whenever the customer interacts with the bank.

The digital banking journey for many financial institutions has already started. For those about to embark – do not delay too long in taking that first step. Tomorrow will be here sooner than we think.
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