The dichotomy between realizing that digital transformation is required and the slow progress in achieving the necessary changes in terms of implementing new technology and changing business culture is drawn out in a new survey. the survey comes from the Boston Consulting Group. The report is titled “Global Corporate Banking 2018: Unlocking Success Through Digital.” The report notes that the digital transformation of finance is a strategic imperative for most banks that wish to remain relevant.
The principle reason given by finance executives for the slow progress is due to limitations with the current technology infrastructure that supports the majority of banking institutions. To address this, according to analysis from The Financial Brand, banks need to focus on strategy.
Here the Boston Consulting Group report states: “The starting point for each financial institution will depend on its business strategy, market position and capabilities…But all must consider how they can reshape their distribution models, improve their value propositions and develop end-to-end consumer-centric journeys to increase growth and customer satisfaction.”
But what does such a strategy look like? The report recommends four pillars:
Reinvent the consumer journey
This means offering digitally based financial services along the lines of Amazon. That means multi-channel and one-click access to financial products. For the bank these means ensuring that each stage of the classic customer journey is digitalized: prospecting, advice and sales, onboarding, transactions, and administration.
Leverage the power of data
The second pillar is all about utilizing data analytics. Effective data analytics allow banks and credit unions to truly understand consumers, identify business opportunities and reduce costs, according to the report. For example, data science can help banks to anticipate loan defaults or to seek out the most appropriate consumers for new financial products.
Redefine the operating model
The third pillar is about banks changing corporate practices and reforming from within. This is about striking the right balance between human interaction with digital and self-service functionality. Most consumers want quick and easy digital services, but for more complex financial products they may want to speak to someone, such as when selecting and setting up a mortgage.
Build a digital driven organization
The final pillar of the transformative strategy is about seeking agile ways of working – approaches to getting work done with maximum flexibility and minimum constraints – and about redefining the organizational culture. This requires, the report notes, an “engaged senior leadership that is committed to radically changing the bank.” This needs to be supported by appropriate funding, talent recruitment, openness to new agile ways of working, and a willingness to take risks.
