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Organizational change for digital banking


What’s a key advantage digital businesses have over banks? Customer focus is designed into their business models from day one.

Traditional bank business models may not support such customer centricity. Most were built in a different era and don’t align well with today’s digital goals. Banking channels largely remain segregated, for example. Products and geographies often vie against each other so that customers often perceive that they are confronting a jumble of processes.

However, by reorganizing their structures and processes around the customer, banks can adapt quickly to digital advances and manage organizational change. Organizational change starts at the top and support for digital, customer-centric banking has to be pervasive, reinforced and measured.

The following change management techniques will ensure your bank creates a consistent multi-channel experience that keeps customers at its center:

Define what digital means to your bank. What does digital mean within your organization? It’s a simple question that too many banks don’t address before they launch digital initiatives.

Yet, clarity of purpose is absolutely essential. As an executive, you need to help define what going digital truly means by gathering input from stakeholders across the full sweep of the organization and by remaining open to bold new ideas.

Developing a roadmap for digital initiatives is an essential part of defining what digital means to your organization. Resist the tendency to skip it; executives who do often find their efforts mired in lengthy debates, false starts and turf battles. 

Focus on operating models and governance. They are the essential planning tools to bridge your bank’s strategy and organization. The operating model defines accountability and responsibility for all activities, from business processes and data-quality management to application development.

Who has authority within the new operating model? That’s the job of the governance model. It identifies decision-making roles, criteria and processes. In addition, governance establishes who must agree to decisions, provide input and bear responsibility for executing activities. The best governance models answer everyone’s questions in advance.

Rethink your reporting structure. Instead of top-down project planning, digital capabilities demand dynamic, discovery-oriented approaches that free teams to quickly test ideas and learn from data and outcomes.

Executives need that same agility. Encouraging experimentation while driving performance takes the right reporting relationships, ownership and digital governance. The good news? You can achieve the changes without a massive reshuffling of organizational charts. The key is the right mix of mechanisms outside of the formal reporting structure. 

For example, create a cross-enterprise structure to develop and execute companywide strategies and plans, such as improving the customer experience. Establishing a Digital Center of Excellence gives your bank a central hub for optimizing new capabilities and serving as home to technology councils and other groups.

It’s settled; everyone owns digital. For knowledge businesses such as banking, digital is the business. Creating a cohesive customer experience requires integrating digital efforts with physical businesses.  

Which C-suite members will be accountable for digital initiatives? Some banks take their digital direction from the chief information officer or chief marketing officer. Several have designated chief digital officers. Still others rely on their CEO’s leadership. Each approach incurs risks and benefits.

The reality is that the digital function is vast and eludes ownership by a single executive. What matters more than its location in a formal org chart is the identification of the key players and the relationships among them.

Break down organizational barriers. How do you dismantle line-of-business silos and enable sharing of customer data and processes? Cross-functional groups are a start. Assembling teams from human resources, finance, marketing and branches plays an important role in uniting disparate and often geographically dispersed functions.

Some banks are recruiting executives from customer-focused industries such as travel and hospitality. Outsiders can bring fresh perspectives. However, a note of caution: Guard against deploying newcomers as the corporate equivalent of tactical SWAT teams. Relying on specialists who swoop in can sometimes run counter to the long-term organizational change that digital transformation demands. Banks can only produce that result when they focus on evolving into customer-centric organizations with a customer-first culture.

Take a new approach to talent. Proactive workforce planning is as essential to banks’ digital evolution as is acquiring new expertise.

Technology is an obvious place to begin. Many banking technology rosters still brim with COBOL and DB2 developers. Banks face an uphill battle to attract top talent in SMAC technologies – social, mobile, analytics, and cloud – as well as in user interface design and collaborative software development. Develop a strategy to counter the job market’s perception of banking.

Banks also need skill upgrades throughout their organizations. Rather than processing deposits and withdrawals, branch associates are transitioning into hybrid positions that are part financial advisors, part technology evangelists (think Apple stores).

Develop incentive structures that work. Stirring bank employees to adopt customer-centric approaches across multiple platforms is a key challenge. Put simply, what’s in it for them?

In the short term, banks are eliminating metrics such as average call handling time. In their place are benchmarks such as net promoter scores, which reward proactive approaches and value customers’ best interests.

Expect incentives to change dramatically in the long term. JPMorgan Chase is putting a new spin on branch services by replacing desk-bound personal bankers and window tellers with associates who move about the branch and assist customers with a more roving style. As jobs evolve, so must incentives.

Cultivate a digital culture. Culture always plays a role in large transformation programs, and digital is no exception. But it’s well worth the effort: Successfully negotiating digital’s cultural shifts is a competitive differentiator for banks. An intense customer focus coupled with the ability to innovate and act quickly is difficult for competitors to emulate.

The upshot for bank executives? Be purposeful in what you say and do. Reinforce customer focus at every opportunity by asking the question “how does this impact the customer?” Launch formal initiatives such as training programs to support new behaviors. Revamp recruiting, job descriptions and promotion criteria.

Don’t stop there. To think outside the box, banks are launching internal programs, start-up investments and incubation projects. Wells Fargo, for example, established its Startup Accelerator program to funnel investments in young businesses developing banking technology. Its Wells Fargo Digital Labs has more of an in-house focus and is located in tech-savvy San Francisco.

Mr. DeLaCastro leads the Global Digital Banking practice at Teaneck, N.J.-based Cognizant. He can be reached at [email protected].