Beyond its buzz-phrase status, “digital transformation” plays a vital role in shaping the future success of financial institutions. As new competitors threaten legacy banks and regulatory environments change, banks need to implement transformation strategies that ensure longevity. If they don’t, they risk being outpaced and overshadowed by competitors that offer clients fully digital, connected experiences.
Decision-makers and IT managers should step back and reassess as their banks pursue true transformation: It should drive business value, cross-departmental collaboration and improved client experience. But to get this right, key challenges must be met.
Here are three imperatives banks face as they work to transform and future-proof their organizations—and deliver the experiences clients need.
Build exceptional end-to-end client experience
Today’s banks are forced to devote significant budget to remain compliant in a constantly changing regulatory world. With this backdrop, any digital investment needs to be purposeful and ladder back to efficiency and improved client experiences.
That means banks must think holistically and not just focus their efforts on a single part of the business. Yet too often they chase technology’s “silver bullets” as they become enamored with the latest gadget fad—and lose sight of the firm’s overall digital mission.
To this end executives often neglect a proper return on investment assessment. What’s the strategy and objective? How do you measure success? For example, robotic process automation (RPA) should be used for high-volume, self-contained work—not complex tasks that require human intellect. Dropping in a new tech solution without clear strategy achieves nothing and masks underlying issues. Nor does this approach account for the full end-to-end client experience; rather, it slaps down Band-Aids at random points throughout the journey.
That’s not to say artificial intelligence (AI) and RPA should be sidelined for now. In fact, great business cases for these technologies apply to the greater context of digital transformation strategy. For example, robotic desktop automation (RDA) can help relationship managers collect information from siloed legacy systems, bypassing the need for manual copy/pasting and toggling between multiple screens. That clears the way for staff to focus on value-added client interactions.
Additionally, AI-based natural language processing can automatically detect the intent of an email, pick up relevant information such as an account number, and automate the processing and response—with more than just an impersonal “automated” reply.
At its core, every element of a digital transformation strategy must ladder back to the client. Each tech integration and process improvement must enable employees to do their jobs better and improve client interactions. The commercial banking industry can get there by viewing digital transformation as a whole journey and process ecosystem with specific paths for prospects and clients.
Enter speed-to-market’s fast lane via no-code tech
Competitive pressures and regulatory restrictions won’t go anywhere, so banks need to act fast. As Klaus Schwab, founder and executive chairman of the World Economic Forum, wrote in a 2015 piece, “In the new world, it is not the big fish which eats the small fish, it’s the fast fish which eats the slow fish.”
Old ways must die hard. The waterfall-based approach to software development has traditionally been a staple with progress flowing in one direction through the phases of conception, deployment, analysis and maintenance. Many established banks still use legacy technology that creates silos between departments—and even teams within those departments. These approaches hinder progress.
It’s time to shatter the divide between IT and business. Instead of perpetuating a laundry-list environment where business requirements get thrown over the wall to IT, the whole organization needs to evolve and embrace agile, low-code technologies.
Low-code (or better yet, no-code) application development technology builds itself, giving managers the visual tools to configure unique nuances that use business metaphors to automatically generate the code and user experience. It also empowers business people to directly interact with internal banking technology; this improves end-user experiences and reacts quickly to market and regulatory changes. The end result: An expanded pool of employees can bring solutions to market quickly without need for deep coding experience.
Technology at its best and most nimble is unified. Running numerous discreet applications is costly and complicated; unified technology acts as an unseen anchor to foster cohesive, end-to-end experiences. It enables more users—not just developers—to make changes as the business evolves and in this way, banks can tackle technological change faster and more efficiently than ever before.
Team up a tech shift with a culture shift
Implementing new technology cannot create organizational change: an internal cultural shift must accompany it.
From the top down, smart organizational alignment starts with a vision, strategy and roadmap that ensures all aspects of the business share metrics and strategies. Granted, it hasn’t traditionally worked this way. For instance, IT may concern itself with optimal up-time while the business side prioritizes client satisfaction. Executives have a call to bridge the gap and integrate disparate departments and systems; aligning all key stakeholders helps organizations evolve towards long-term success.
Moving forward in today’s marketplace requires a trial-and-error “fail fast” mentality. As younger generations fill management and decision-making roles, we see a natural movement in this direction. So what should the objectives be?
Modernize skills and attract talent.
Create an innovative, client-centric culture.
Unite business and IT teams in a co-located environment that promotes synergies.
Top-notch technology won’t solve internal departmental issues—but top-down cultural change that permeates organizations can.
Putting it all together: The future-proof bank is now
It’s much easier to talk about digital transformation than to execute successfully. But financial services organizations can’t afford to test and discard solutions, exceed budgets and fail to adequately address competitive drivers.
To achieve true digital transformation,banks must select technology that can drive integration between business and IT, enabling them to adapt quickly when faced with change. They need organizational alignment—including a vision and roadmap that starts at the top. And ultimately for any decision they make, they must focus on how it impacts the end-to-end client journey.
Banks can clear the hurdles but time is of the essence. For true digital transformation is not a product in a box but a process best thought of outside the box: One that requires the courage to transform the institution, culture and attitudes down to the very last employee.
Holly Hughes, BAI CMO, will share BAI’s latest banking channel research and host a conversation with Colleen Wilson, Vice President, Product at MANTL, on what the trends mean for financial services leaders....
Compliance training and professional development courses that are efficient, effective and on-point. Give your people the latest industry-approved tools they need to improve performance, reduce operational risk and better serve your customers.