How Long Should Digital Transformations Take?

Presenting My Two Cents – March 2024 edition.?

This month, we’re going over the step-by-step process businesses undergo to become digital-first and how long it really should take.?

By 2030, the digital transformation market is expected to reach $3.1 trillion, highlighting its critical role in shaping the future of business.?

But despite the hype around digital transformation, especially in the banking and financial sectors, up to 95% of these efforts fail to achieve their intended outcomes.

So what can finance brands do to succeed?

?? The Three Phases of Digital Transformation

Digital transformation can be broadly categorized into three phases:

1. Modernization: The initial phase involves digitizing existing processes to improve efficiency and customer experience. This includes introducing customer-facing apps and automating internal processes.
2. Enterprise-wide transformation:?This phase extends the digital capabilities across your organization, integrating systems and processes to create seamless omnichannel experiences and using new tech to improve operations.
3. New business creation: With a solid digital foundation, you can now explore new business models and revenue streams to expand your market presence.

?? Addressing The Challenges?

There's a number of challenges businesses face when adapting to digital transformation, namely because it's all new for their systems and team members.

Some of these challenges can include:

• Security and privacy concerns
• Integrating with legacy systems
• Resistance to change from employees
• Measuring ROI and justifying investments
• Aligning digital strategy with overall business goals
• Keeping pace with rapid technological advancements

To overcome these obstacles:

• Prioritize cybersecurity and data protection
• Phase system modernization for seamless integration
• Foster culture embracing change and its benefits
• Establish clear metrics to measure progress and ROI
• Ensure cross-functional leadership aligns initiatives
• Ongoing staff education on new technologies

?? Strategies to Accelerate Digital Transformation

While comprehensive digital transformation is a long-term endeavor, especially for established enterprises, there are strategies to expedite the process:

• Leadership commitment: Committed leadership that sets a clear transformation vision and drives initiatives from the top-down is critical for maintaining momentum.

• Agile methodologies: Adopting flexible and efficient methodologies helps reduce the time to market and adapt quickly to changes.

• Low/No-code platforms: These tools enable rapid development and testing of new ideas.

• Continuous upskilling: Equip employees with digital skills to foster a culture of continuous learning.

• Cultural realignment: Alongside technical changes, build a risk-positive culture that embraces experimentation and collaboration.

?? Key Applications in Banking

For banks, staying relevant means going digital. Key areas of focus include:

• Customer experience: Rolling out mobile apps, online portals, and other digital banking platforms to make account access and financial services more convenient and secure.
• Security: Implementing biometrics, encryption, and other advanced security measures to lockdown user data and build trust.
• Personalization: Leveraging data analytics to tailor product recommendations, advice, and services based on individual customer needs and behaviors.

?? My Two Cents

As someone guiding financial institutions through this process, I cannot overstate the importance of a long-term, phased approach.?

Too many firms pressure for overnight disruption, ignoring critical foundational stages.

Begin by modernizing legacy systems and digitizing processes – this strengthens muscles for more complex transformations. Measure progress against benchmarks, adjust as needed, and invest in digital skills and experimentation culture.?

Attaining digital maturity is essential for making sustainable pivots.

?? Closing Thoughts

By finding the right balance between immediate action and strategic planning, making smart investments, and cultivating a flexible and resilient workforce, firms can successfully transform digitally.

The effort is considerable, but the rewards—lasting relevance and success—are well worth it.

?? Banking Sector Month in Review

• Japan's central bank may be on the verge of a historic shift (via CNBC)

• New York Community Bank received $1 billion from private investors to improve its financial stability. (via CNBC)
• Goldman Sachs economist: India is clearly going to be one of the ‘bright spots’ for global growth (via CNBC)
• China kicks off the year on a strong note as retail, industrial data tops expectations (via CNBC)

?? Next Edition Preview: The Rise of Neobanks and Challenger Banks