Is digital transformation future of banking?
The banking sector remains an industry in flux. The face of banking nowadays has changed for past few years. The days of high ROI are things of past. Management is judged now by different matrices; the cost optimization and right allocation and usage of resources top the rest.
Within recent past transformation have become a global imperative across banking. While business re-engineering and process automation are not new and have a decade old history. Business transformation is comprehensive change in strategy, operating model & tools of the company, shift in mindset, and processes with an aim to achieve a dramatic improvement in performance and alter bank's future trajectory.
Why transformation is lifeblood?
Banks have to make transformative changes during the period of great uncertainty (sluggish economic growth, increased regulatory costs, market competition & emerging technology advancements). This is mainly due to pressure of local and global regulations.
- The digitisation of traditional business models, processes, products and services have become a matter of survival in the “digital economy”.
- This is all about using technology to bring speed and efficiency to existing businesses.
- It’s about automating processes; freeing employees from doing tedious tasks to focus on creativity; improving workflows; reducing risks and, ultimately, it’s about improving service & product quality and attaining customer satisfaction.
Transformation is hard, and digital ones are even harder
Most major change initiatives generate only lukewarm results. Transformation is generally assumed as an event however, this is a continuous process, which advances through stages and can take years along. Mostly, pressured to speedup the process, stages are skipped resulting no desired value. Small baby steps would work and short cut won't.
Equally troubling, not creating a sense of urgency & importance of the change amongst the teams, 80% achievement is celebrated whilst 20% bottleneck is ignored, unclear vision, decreased or no coalition within or outside team, create obstacles in the way of change.
Outdated regulations, legacy culture & inflexible mindset (that has not changed in decades), internal silos, relying on old systems & technology are the major toppings.
But another one, digital transformation, is a more bumpy road for banks. Almost every banks is offering digital banking solutions to their customers. But does that really suffice to move in the digital age? Travelling the full digital journey; investing in new technologies and processes alone will not do the job. Digitilization also requires rigorous change management program (radical behavioral change amongst employees) and encouraging customers' mobility too.
According to McKinsey; The average digital transformation stands a 45 percent chance of delivering less profit than expected. New research shows that five practices maximizes the chance of extraordinary outcomes.
- Laying out clear priorities.
- Investing in talent—especially at the top
- Committing time and money.
- Embracing agility.
- Empowering people
What's next?
In order to digital transformation to happen a successful story it is necessary that while key chalking out organization's transformation strategy this is clearly defined how innovation would be managed. Innovation is about change. This should be easy, worthwhile and ways to manage the adoption should be clearly demonstrated.
Individual silos are toxins. Going out of offices, working outside organizations, collaborating with tech firms, engaging internal teams specially human resource because innovation will occur when different minds working together.
Hire the best people now; getting the people who are passionate to solve problems, people with multiple talents (curiosity, fast learner, adaptable etc.)
Brainstorming has never been a good method to create ideas instead to create confusion only. More brain and less storming can be more beneficial.
Right rewarding mechanism amongst transformers to outperform and bring about desired results.
Think Tech is the new ideology!
Ideas mentioned in the article reflect purely personal sentiments.