What's Holding Back Your Digital Transformation?

Chances are legacy systems and a risk-averse culture are holding you back in the race for a new generation of digital-first consumers.

 

April 13, 2018
by Percy Johnson, Vice President Agile Solutions

Image Credit: Shutterstock

All sectors of the economy are facing major challenges, as well as tremendous opportunities, as the ways we do business continue to be transformed by the digital-first business landscape.
In the banking sector, emerging technologies such as Artificial Intelligence (AI), Blockchain and the Internet Of Things (IoT) offer great hope of disruptive change, yet they exist alongside the risks associated with slow growth, increased regulation and challenges from nimble competitors. 

For nearly everyone in the financial sector, there is no turning back from profound changes as we adapt to the digital economy.

An EY survey found that investing in digital transformation was the second-highest priority in the industry this year, with 84% of executives citing it. The key is not just to change but to transform effectively and in a way that sets you up for further growth. 

Thriving In The Age Of The Customer
Many leaders and CTO’s of financial organizations feel overwhelmed by the new technologies, paralyzed and unable to make the kinds of moves that will secure their future. If you can identify what’s holding you back, then you can solve it, and ensure that your digital migration is going in the right direction. 

In a revealing new study by market research leaders Forrester, called The Digital Transformation Race Has Begun, the authors elaborate on how to cope in the Age of the Customer. They use this phrase to refer to “a 20-year business cycle in which the most successful enterprises will reinvent themselves to systematically understand and serve increasingly powerful customers.”

The customer has more power than ever before. They have a a huge selection of excellent products to choose from, powerful devices to operate from anywhere, and the experience of interacting with digital leaders such as Amazon and Google which has given them a taste of how well things can be done. 

The fintech sector is being asked to step up to these very high standards. In order to ‘systematically understand’ the customer, banks need high quality data, and they need to know how to use it. “In today’s business environment,” writes Forrester, “a firm that lacks information and insight to power its strategic decision-making will compromise its ability to win, serve, and retain customers — by relying on gut-feel decisioning and resulting in lost business.”

What benefits are you offering the consumer? How can the data that you have stored be used to benefit your clients, even if in just small ways? Where are the bottlenecks with your data? 
Answering these questions can help you define your response and layout a roadmap that adds value for your consumers. It can be daunting, but it’s reassuring to know that study after study has shown that people are prepared to pay more for a better user experience. 

In many cases, financial institutions are getting it right. The Forrester study notes that, “banking firms were leaders in ease of use and ranked strongly in most capabilities apart from disruptive business model readiness and data optimization, where they came in second to last.”

When it comes to moving forward, there are three big challenges to confront:

●    A highly regulated environment
●    A risk-averse culture
●    A reliance on core legacy technology

In the rush to change, there is a tendency to not invest enough in the staff who need to learn new ways of working, which can leaves them isolated and hankering for the past. When teams resist the new tools, or don’t understand properly how to use them, they can quickly become resentful and fall back on less effective but understood systems. This is a recipe for disaster, and must be closely monitored. 
The best change managers find facets of the automation process that can really help staff perform better, and in so doing, make them feel a valuable part of the team.  

Too often, the presence of competition doing things differently drives companies into rushing to adapt what they have, and to try and layer new software systems on top of outdated legacy technology, when in fact a fresh start and a clean slate is what is required.  

Taken together, these factors will stifle innovation and create disappointment, which leaves a bank or a lender settling for second best and trying to make that work, instead of fulfilling all the potential that the new ways of working should provide. 

Data-driven Solutions
 
Image Credit: Unsplash

AI Foundry has been working with data long enough to understand where the bottlenecks are for customers. Many companies struggle to harness their data in such a way that it is captured and classified, with the information then extracted and put into a workflow as needed and outputted to a managed data store.

Once the data has been successfully captured, then it can be analyzed and managed across both on-premises and cloud-based locations to achieve the best results. Great data, accessible at a moment’s notice, will provide the roadmap for effective transformation. 

More Than Just Customer Service
The Forrester Study found that banks are world leaders when it comes to providing ease-of-use to customers in the digital economy. Customer experience is one of the best ways to differentiate a financial service provider from its rivals. It’s relatively easy to identify areas that need improvement, and the rewards in customer acquisition, loyalty and retention can be enormous.
But the banks struggle when it comes to data optimization and dealing with disruptive business models, where they scored second to last. 

Customer experience on its own is not enough. Your service has to be more than that. For example, many new consumers need good advice more than anything else. Making it easy to identify their banking needs and to place new customers in the right banking ‘stream’ is a great use of your data, and is absolutely vital in building a satisfied customer base.  

Nearly 60% of consumers say that there is not a lot to be gained from switching banks. They want their banks to do better and to succeed in this new era. Start slowly, focus on steady, granular innovation and improved communication that can be sustained over the long term. Those are are surefire ways of generating better data and improving on the fintech products you are offering your clients. 

The next phase of digital transformation needs to move beyond the customer experience and into deeper, more personalized insights that carry both your employees and your customers into a better user experience. 

Connect with AI Foundry to request a demo, and to find out how your data can work harder for you.

 

Sources:

https://www.computerweekly.com/news/252437348/Legacy-IT-hampers-digital-strategy-at-banks-and-insurers

https://www.computerweekly.com/feature/Customer-experience-must-be-digital-focus-for-banks

http://aifoundry.com/actionable-intelligence/overview/

http://www.virtusadigital.com/wp-content/themes/the-box/images/digital-transformation/The%20Digital%20Transformation%20Race%20Has%20Begun.pdf