Digital transformation has redefined how customers expect their problems to be addressed, even when they’re not aware: at the touch of an easy-to-use, well-designed app. Those expectations present bankers with a unique set of challenges.
While every banker agrees that digital transformation is necessary, desirable and valuable, there are differing opinions on the best way to transform.
Some choose to transform everything at once, which is a massive and risky undertaking when considering the complexity of legacy systems, and the potential impact on customers. Others choose to proceed more incrementally, but again across all systems.
The sweet spot is a combination of the two: to transform by making a few changes that have high material impact.
So why is it important for banks today to find this sweet spot?
As digital technology touches almost every facet of customers’ lives, they are increasingly — and understandably — expecting banks to provide frictionless and convenient access to services.
As a result, the laundry-list of digital products and services grows longer by the year. And simply applying ‘digital makeup’ or modernizing front-end systems will not cut it.
Undergoing digital transformation means updating a bank’s core foundation. And with it, the front-end and back-end technology of the entire technology ecosystem.
This includes
There is no magical formula for digital transformation and each journey is unique. But there are three key steps that are critical when beginning a transformation journey:
The first is making sure there is leadership alignment. The recognition for change needs to be championed from the top and driven by the business, which needs to be accountable.
Lack of alignment is a common roadblock in bold transformations so securing support and involvement across the entire organization is key to success. The retail, digital, technology and analytics teams need to work together seamlessly to deliver personalized, real-time experiences to customers.
Second, to build on a strong foundation, banks must draw on talent from across the bank as well as from outside the bank. For example, Scotiabank recently formed
Third, banks should solicit advice from outside experts. Banks are a part of a broad innovation ecosystem and need to seek feedback from top talent continuously. Scotiabank seeks out advice from experts outside the bank and the financial services industry: people who have led digital transformations successfully. They add tremendous insight and value into the direction of not only the company, but also the industry.
The hardest step in transformation is always implementation and execution. The key to a successful implementation is flexibility and not worrying about failure.
Destigmatizing failure and nurturing an ‘agile’ approach to development is a necessary step when innovating. Those who embrace an agile approach to transformation — and gather/implement customer feedback along the way — are more successful at cementing trust, and creating stronger relationship between customers and the bank.
However, once transformation is underway it does not stop.
Operational efficiencies have been created throughout the bank — front, middle and back — by streamlining processes and applications, reducing structural costs and deploying new technologies. Changes that happen from here are changes for the better. And these changes truly evolve the customer experience while consistently reducing operational costs.
Transformation is about improving results,
During the first year of transformation, revenue may not match the investments made. But as transformation crosses the tipping point, revenue and investment will break-even. The change isn’t just felt by customers, it is experienced across the bank, and is making an unmistakable business impact.
