Making Digital Transformation Meaningful in Financial Services
Digital transformation is hot these days. Almost every firm has a digital transformation strategy. But all too often it gathers dust on the shelf because it doesn’t address how to make it a reality.
Often we fail to consider the human element. The goal of digital transformation is not to displace people. It’s to make them more productive – helping them achieve more at less cost in less time – ultimately inspiring better outcomes for customers and employees.
The mistake often lies in focusing more on the digital than the transformational. This makes us technology rather than business driven. But digital transformation is a business initiative where technology plays an enabling role.
The challenge is how to redefine the customer journey using technology and how to make that a reality. It’s a continuous process – strategy and execution combined. Too often one comes without the other. Too often we buy the technology first, then figure out how to make it work.
Companies like Spotify, Uber, Square and LinkedIn have disrupted traditional models and achieved their success by building their business around a redefinition of the customer journey. They have analyzed where technology improves it, eliminating obstacles, and creating a better experience. They have developed a strategy and succeeded in making it work.
What about banking? There are many examples of brilliant strategies poorly or partially implemented: customized front ends and legacy core systems; new applications that fail to gain traction; duplicative technologies that fail to meet expectations. We buy one. It doesn’t work. We buy another, etc.
Digital transformation involves a continuous process of combining strategy with execution, beginning with the customer journey. Better understanding customers empowers employees to support them more effectively, reduces the risk and cost of servicing them, simplifies and optimizes operations, and develops new products that customers really need. The net result is a transformed business.
Adoption and change management are a critical part of this process, because we have to deal with the fabric we have. This often leads to the concept of a two-tier approach where we support our legacy environment as we transition to a new model.
Problem is such an initiative transcends budget cycles and often offers longer term, unpredictable returns. Block chain is a classic example. The answer may be to start small but aim big, investing in a cycle of continuous improvement and reinvention. That’s our approach to block chain.
Think of digital transformation as a start-up operation. Take a customer segment (internal or external); remap the customer journey digitally transformed, build the new business around this and then transfer that success in stages to the rest of the enterprise.
Don’t add new technology for its own sake; protect jobs that have already gone or business models that no longer work. Digital transformation is a business initiative, not a technology one.
Read more on the Microsoft Banking & Capital Markets and Insurance blogs
