TRANSFORMATIONAL FEARS MUST BE OVERCOME IF TRADITIONAL FIRMS ARE TO ATTAIN CUTTING EDGE OF INNOVATION
Published in Global Banking and Finance Review
There’s a well-known saying in business – that you have to ‘speculate to accumulate’. I’d argue instead that it’s wiser to innovate to accumulate in the modern banking industry.
Unless the big banks start thinking out of the box like the small, agile disruptors who are turning the sector on its head, their dominance could evaporate.
There are two ways to deal with change – to see it as something to be feared, or to see it as an opportunity – and digital transformation must be embraced in the current climate of unprecedented technological ferment.
Unfortunately, it appears that too many British businesses are afraid of what could result from meaningful metamorphosis. A recent study from Microsoft suggested that 49% of companies feared the change that comes with digital transformation, in spite of the wide benefits.
A further 61% of workers admitted they felt anxious when new technology was brought into the workplace by bosses, while 59% were worried about the impact that automation of tasks could have on their job[1].
By comparison, the small operators have proved themselves to be fearless. They know they can quickly adapt to the changing digital economy and the rapid evolution of technology as they are not encumbered by the legacy of their businesses. They are not held back by a “that’s just the way things are done here” mentality, or by the sheer size of their data architecture, as the larger institutions may be. Instead, they see an opportunity to evolve their business – and they grasp it with both hands.
Young challenger businesses are typically more tech-savvy and digitally-minded. From their very inception, they’ve been shaped by industry learnings on digital transformation, and are more willing, and perhaps more readily able, to adopt and adapt.
We know that bigger banks have been left fearing that they will be rendered obsolete by the pace of change. They see online ‘wellness platforms’ edging into their territory, helping people budget, bank, pay and crowdfund all in one place. This should not be seen as a threat, but as a warning – closer integration with the customer is not only possible, it’s essential.
But as the demand for their banks’ services online and using mobile apps grows – and branch closures like those at RBS and NatWest gather pace – most of the big players are not getting to the so-called ‘digital promised land’, as outlined in a recent report from Avoka.
It concluded that at least half of their personal banking services must be available digitally and in an easy-to-use format[2].
That same study showed that traditional banks are missing an even bigger trick among their business clients after it found that only one in four business banking products was available digitally. In terms of cost savings and ease of use, a switch to digital is a no-brainer for both client and bank.
Blockchain – most closely associated with the Bitcoin boom – is also challenging our traditional financial institutions’ dominance of the processing of secure transactions.
Then there’s the rise of FinTech which holds a clear message – that the way we handle our finances will be revolutionised by smart connected technology.
Nevertheless, while traditional banks may be daunted by the reaction of their customer base to evolving products and digital transformation, they should remember that the client data they hold is a significant asset they can use to their advantage. It’s also never too late to start closing the gap.
Ultimately, however, we shouldn’t forget that humans are at the core of the digital transformation process – not just as clients, but as employees. Staff often fear the consequences of change but they must understand that the need to evolve the business will help it to thrive in aggressive conditions that less forward-thinking institutions might not survive, in turn helping to secure their own workplace futures.
Staff are no less than digital transformation agents, and must be considered the first weapon that businesses deploy when looking to improve operations. True change is much more than just introducing new technology – it’s about changing behaviours and structures in tandem with a fresh transformational outlook.