Transform financial services through digital acceleration
Following last week's Open Finance and Inclusion Summit, Vikas Krishan from event sponsor Globant explores the steps organisations can take to embrace the digital future of financial services.
2020 was a catalyst for digital transformation. Online sales in the UK accounted for a record 35.2% of all retail in January 2021, and up to 92% of UK consumers intend to continue purchasing online after COVID-19. Within financial services, demand for digital options skyrocketed as customers avoided visiting branches and bank employees shifted to working from home. HSBC has recently stated that 96% of transactions are now done digitally
Financial services companies have already begun to make major changes to address the initial COVID-19 crisis. But to avoid losing market share to new players, incumbents must sustain this rapid rate of change for the long term.
Organisations must take proactive steps to identify business opportunities. This process, called “business hacking,” is different from the typical change management methodologies legacy financial services organisations may be accustomed to. It requires pushing beyond what’s been done before to envision a new future.
What should financial organisations think about before starting the business hacking journey?
To imagine the future for your institution, start by putting the customer at the center. Explore their needs and expectations, and put those in context with larger trends such as the increasing importance of personalisation and transparency. Then look to see how technology can augment the business opportunity in the areas you’ve identified.
Seize those opportunities by staying on top of the trends and drivers that put your customer first. For example, one recent Globant project applied conversational interfaces drawn from customer service solutions to a payments solution to boost engagement and ease of use. A crucial part of these successful experiences is having the tech infrastructure and innovative culture to support them. Turning opportunities into action often requires broader organisational change — i.e. digital transformation.
Where does your company stand with respect to digital transformation?
To begin your digital transformation journey, you must first look at how your company reacts to digital change. In our experience, organisations fit one of a handful of change profiles.
Some financial services organisations boldly explore new possibilities, becoming market leaders in the process. Others test the digital waters but stick to safe bets, prioritizing incremental innovation instead of pursuing a full transformation, leading to incomplete results. These are the followers — the middle of the pack. Still, other financial services companies struggle to establish an effective digital strategy at all — the challenged, who are still starting out in the new world of digital.
To thrive in this new era, you must accept volatility, uncertainty and challenge your beliefs. Leaders must commit to exploring the digital realm fully — not just treating it as another communications and marketing channel.
Our clients are beginning to take a holistic view, looking for partnerships with third parties like fintechs instead of seeing them as the competition. New commercial models, leveraging the core competencies of platform providers are beginning to gain traction within the market and we are seeing the development of symbiotic ecosystems driving this change.
Whether your organisation is one of the challenged or already a market leader, the goal for your digital strategy should be to drive innovation - not just as a “nice to have” but as a fundamental business imperative.
Globant recommends that Financial Institutions follow these five steps to continuously iterate on and improve their digital capabilities in a systematic way that can scale across their business.
- Conduct a maturity assessment
Before you take any concrete action, reflect on your company’s capabilities and how it has previously reacted to digital change. Take into account, not just the technology architecture, but your organiation’s cultural ability to adapt to the digital journey to come.
- Establish a digital transformation roadmap
Now that you’ve discovered or created new solutions and initiatives, organise them into different layers depending on their scope and impact.
- Business hack to discover new opportunities
Consider the needs of your customer, key trends in your industry, and learnings from other industries as you work to brainstorm new ideas. Don’t be afraid to challenge traditional methods in financial services and expand what is possible.
- Build and deliver new solutions
Now it’s time to implement your roadmap. Adopt continuous Agile delivery to shorten your software release cycles and create a feedback loop that drives constant improvement and change. Ensure that the cultural aspects of your change agenda are factored into the process and that you build an organisational culture of adaptiveness - we have seen that this is often a limiting factor in driving digital change.
- Measure, improve, and scale
Digital transformation isn’t a “set it and forget it” process. Once you’ve released a new solution, measure its impact on customers’ lives and refine your solution based on the data you collect.
Disruption has already happened — you must take advantage of the opportunities now, or risk falling behind the competition.
By following the processes laid out in this article, you can begin to build a robust digital transformation roadmap that will guide you on your next steps toward embracing the digital future of financial services.
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