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A few universal truths for digital transformers

Know your customers, challenge the status quo and get used to a state of constant change.

Dec 2, 2022 / Digital Banking
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When it comes to digital transformation, banks and credit unions are all over the map in their approaches. But no matter how far a financial institution is along in its journey, there are some tried-and-true principles governing how to proceed.

Above all, never stop.

“I think many banks and credit unions have approached change like a core conversion—something that’s painful but when it’s completed, it’s set and done and the institution then operates for a while in a steady state,” says Jesse McGannon, vice president, advisory services at Strategic Resource Management. “That’s the way of the past—people need to get used to always being in a state of change.”

Institutions should be comfortable managing multiple projects at the same time and implementing with agility, he says. They need to constantly reevaluate their change portfolios to determine what they need to continue, pause or accelerate as market demand changes.

When an institution goes down the path of digital transformation, whether they’re starting or accelerating, they need diversity of thought, says Ross Creasy, chief innovation officer at the $23.5 billion-asset Ameris Bank based in Atlanta.

Ameris Bank started its digital transformation internally, then extended it externally. Internally, the institution made sure collaboration tools for teammates were up to date and launched a modern intranet so teammates had better visibility into what was going on across the bank.

“We also implemented robotics and more automated processes,” Creasy says. “If you can give teammates better tools and technology to support their work, it makes it easier for them to serve customers.”

On the customer side, more people are comfortable with digital channels, so institutions need to be “even more progressive,” he says. They should be focused on an API-layered architecture in order to move information in real time, because customers expect instantaneous results on transactions.

Digital transformations are not just an organizational restructuring—they’re also an opportunity to create a new operating model where people, process and technology are consistently tuned to deliver value, says Stuart Cook, chief digital product officer at the $43.4 billion-asset Valley National Bank, based in Wayne, New Jersey.

“ “You are doing so much more than a technology project and well-designed IT architecture,” Cook says. “This is the synthesis of people, process and technology.”

Institutions should measure success using leading indicators rather than typical internal lagging indicators, and they should shift the goal of tech from meeting the project demands of P&L owners to delivering modular platforms that serve each product team.

If an institution’s customer-facing transformation efforts are way ahead of its back-office conversion, the institution can catch up by aligning cross-functional teams, leveraging skills such as product and design, data, engineering and quality assurance, Cook says. Each of these teams should be aligned to a customer outcome and empowered to plan with agility, with process ownership and risks owned by teams.

If you’re just setting out on the transformation journey, start by defining what digital transformation means to your organization in the context of your existing strategy, says Josh Brown, chief operating officer at BrightFi, a financial services company based in Scottsdale, Arizona.

“If you’re in early days still, check to see if you’re on budget and on track to reach your goals,” he says. “You should be evaluating your core provider’s capabilities as the backbone of your tech stack and arriving at a decision about whether you should continue using them or move to a new cloud-based platform with open integrations.”

If your institution has made a lot of investments in customer-facing features, products and design, your team should now look closely at whether the institution can sustain those improvements from a servicing, maintenance and future growth perspective with its existing core and data infrastructure, Brown says.

The tried-and-true success metric that can be applied evenly is ROI. Have investments paid off the way they were pitched and envisioned? Have the efforts to digitalize yielded outcomes that enable your institution to compete better?

“Above all, though, it’s important to note that it’s a journey—embarking on the effort to pursue digital transformation means committing to knowing your business and knowing your customers,” Brown says. “That is the only way banks can get a strong return on their investment.”

Katie Kuehner-Hebert is a BAI Banking Strategies contributing writer.

Learn from industry leaders and understand best practices with the insights shared in the BAI Executive Report, “The changing intersection of banking and technology.”