It’s Also About People, Culture and How Work Gets Done

Almost daily we read about digital transformation and how banking has become a technology business. But technology is only part of the story. As Jeanne W. Ross of MIT Sloan’s Center for Information Systems Research says, “Clearly, the thing that’s transforming is not the technology – it’s the technology that is transforming you.”  I recently joined Jim Marous to record a podcast about bank transformation. This blog is a summary of our conversation. 

Digital transformation for banks is nothing new, but the impact of the pandemic over the past 18 months has put a lens on the urgency for technology to enable better customer experiences across all financial institutions. Whether it was enabling Paycheck Protection Program (PPP) loans in the U.S. to keep small businesses afloat or allowing consumers to have easier access to their funds remotely – the technology powering banks and credit unions came into clear focus.

For financial institutions that were already well on their way towards a modern digital strategy, this meant accelerating their plans to stay ahead. For banks that were behind the curve, it meant quickly pivoting to enable vital technologies to meet consumers’ evolving needs.

The scope of what is possible with technology and how we implement it has changed in the wake of the pandemic – but technology alone does not a transformation make. As financial institutions continue to modernize to stay ahead of digital adoption, here’s what they need to do to drive a successful transformation:

Reinvent Your Processes

When a financial institution chooses to undergo a core banking transformation, one of the first questions asked is “Will this do the same things as my old system?” But that’s not the right mindset to begin with – replacing like for like. Instead, banks and credit unions should view a technology transformation as an opportunity to create something new, and to do things differently.

Instead of just swapping out one system for another, all organizations should consider how they can leverage advanced technology to enable things that weren’t even possible before. Consider these questions: How can we enrich the customer experience and the employee experience? What processes can be introduced/automated to make operations more efficient? What more can my bank do to quickly offer services in our times of need?

For a technology transformation to be effective, empower and encourage your employees to embrace change, including adopting new processes and doing new and different things. Think about how you can best redeploy your workforce to leverage employees in the most impactful and value-add way to make the most out of your investment in modern technology and meet your business objectives.

Commit to Transformation

Customer needs must be placed front and center! To truly appreciate the benefits, the bank’s transformation needs to be end-to-end and seamless – from the customer through to the back office, and all points in between.

For example, think about customer onboarding and the process of opening a new bank account. To provide a real-time, easy, and enjoyable experience, the bank needs more than a façade that digitizes just the front-end touchpoint for the customer. Banks must commit to a totally seamless customer experience, from app tap to core, and this means restructuring what goes into the banking model to ensure that it’s delivering the convenience today’s consumers crave.

Think about what Apple did when the Apple Card was introduced – opening an account was nearly as exciting as opening up other Apple products. This is the key takeaway for institutions undergoing a digital transformation: Bring excitement, speed and efficiency to the customer experience and ensure there are no problems down the line by reimagining and transforming the entire process.

Consider Culture

To truly drive transformation, the financial institution must foster a culture of innovation from the top down. If you don’t bring your team along for the journey with you it can hinder the process. Leadership must look at their organization structure and find ways for every employee to buy into both the benefits and the necessity of change. Think in terms of what the transformation means for each individual personally, for your bank as a business, and for current and future customers. How will every participant on that journey be using and/or impacted by the new technology?

One of the biggest mistakes we see is how companies measure success: Many consider headcount to be a key metric and note high headcount as signifying the importance of a department. The bigger the better right? With digital transformation that’s not necessarily the case. Part of the point of these transformations is to free up staff to support other areas of the business. Financial institutions must keep that in mind, and develop a culture that understands the importance of streamlining and efficiency.

What’s Next?

Banks, credit unions and even fintechs must continue to question what is possible, even if it’s tough. Consumers are going to continue to expect to see results in real time as more industries meet the moment. As we saw with PPP, lending is ripe for disruption and we are seeing this happen in the retail sector with Buy Now Pay Later (BNPL) loans. Consumers are eager (and now able) to get these financial products within minutes.

For financial institutions, data will be the next big frontier, balanced with smart consent management and using data to drive real consumer value. These are tremendously exciting times for institutions that are willing to push their boundaries and evolve to meet changing customer demands. Committing to the full promise of digital transformation will bring not just increased customer loyalty, but the ability to deliver market-changing solutions and innovations at an unmatched pace.