In fact, the entire traditional business ecosystem is changing. It’s not just customers who are changing; it’s also resources, competitors, speed of change (accelerating fast), market players (new and different rivals), and innovation trends (robotics, artificial intelligence, virtual reality, etc.). So it’s time for the financial enterprise to embrace a continuous-change mentality.
Should we be changing or re-inventing?
We are certainly going through key moments of change. There are many social, demographic, and technological changes underway and these contribute to accelerated transformation in most business sectors including transportation, leisure, and culture.
The financial sector is also exposed to necessary transformation – it is necessary because business in this sector is not what it used to be. Lending money to customers at a higher rate than the one they get for their deposits is no longer profitable. The returns are insufficient to cover the bank’s conventional operating expenses.
This issue is compounded. Traditionally, exchange markets have used rate levels to determine the value of a bank. The share value for most banks has been steadily dropping over the last 10 years. Usual banking business methods do not seem to have the same appeal for investors. Instead, they prefer newly created types of business – ones that require fewer tangible assets and use better-valued intangible ones.
What does digital transformation mean to you?
We asked one of our customers what digital transformation means to them. The answer was clear: it means business transformation run by the business unit; lower resource utilization; higher productivity; and more proactive management of customers, leveraging on what technology and digitalization have to offer.
Banks are, in essence, digital businesses. All supports use ones and zeros, from conversations with clients (whether these are by phone, email or online chat) to transactions, documents, and operational flows. Because of this, everything can be accessed and utilized by digital means. The basis for digital transformation therefore exists already.
Starting from what exists, how can we move forward to digital transformation?
To move forward to digital transformation requires financial organizations to define a new business strategy – one that is capable of responding to continuous change with a consistent approach. Some essential considerations include:
- Reduce resources – with digital transformation, the bank requires fewer employees, branches and ATMs;
- Increase productivity – banks must achieve more operations per employee and more clients per managing agent; and
- More proactive management – the bank’s offices are no longer the centerpiece; instead it’s the customer. The bank must adapt itself to each customer’s way of life and availability; it must anticipate customer needs. This means that customers get to choose when and how to interact with the bank – they can do this through a remote-agent model which delivers high availability and deep financial knowledge. The challenge is to turn this model into a system and ultimately take it to the branch office.
How do we do this with adequate speed and responsiveness?
Traditional business development methods are too slow to respond to customer demands in the digital era. The operational and technological platforms cannot change and adapt quickly enough, especially when new players do this in a highly agile fashion.
Agile development, Dockers, DevOps, and other new methods, processes, tools, and applications are enabling existing financial organizations to evolve towards digital transformation. Today, any business can exploit technology to develop new solutions and make these available to users in a much shorter period of time (development, testing and deployment times can be significantly compressed)…
What is the optimal point of focus?
In conclusion, customers come first. For digitalization of the financial industry, all signs point directly to the customer. As their needs adapt to the digital era, the bank must follow suit, while continuing to offer the secure, trusted, reliable experiences that customers of all generations have come to expect.
In this new digital era, the dual challenge is to think of a new business strategy and always keep in mind the interests of the customer.
Enterprise Services, together with its financial sector customers, is working towards accelerating transformation. We do this by implementing rapidly scalable hybrid infrastructures (cloud-based), emphasizing:
- The value of data; it provides a better understanding of customers and their needs (analytics);
- The importance of protecting the new digital enterprise and its customers from informational and service risks (security); and
- The acceleration of productivity and efficiency for an agile response to market demands (process digitization).