Over the last few years, the rush to digital has all but consumed the financial services industry. Banks, in particular, have been driven to compete with nimble fintech firms by working to provide the same kinds of all-digital consumer offerings.
COVID certainly did its part to drive lenders in the direction of digital, as both Accenture and Deloitte have pointed out.
The work has been challenging, but we have seen many successful transformations. Firms that succeed have done so by overcoming a number of significant barriers. There are many challenges awaiting any institution that moves down the path toward digital, but there are three we see quite often.
Choosing the Right Tech Stack
Those who believe that the digital transformation is all about technology are missing much of the bigger picture. It’s people who will ultimately make it work and a new process will enable it.
However, technology is still critically important. The first stumbling block that many banks encounter involves choosing the right mix of technologies to take their institutions fully digital. Whether that be SaaS or a custom Cloud-based solution, making the wrong choice can cost efficiencies as well as flexibility, reduce consumer satisfaction and limit or eliminate the return on investment.
The right mix of technologies and mindset will accelerate the institution into a leadership position.
Getting in the Right Mindset
People tend to favor the familiar. There’s comfort and convenience (and compliance approval too!) in replicating existing processes, however, this is not always the way to get the most out of your transformation. It’s time to take a hard look, and do the hard work, of re-examining your processes in the context of digital. Yes, it may mean you have to run things through compliance and consult with other groups, but the one-time pain of that begets you better long-term gains.
In the digital world the experience needs to be as convenient and fast as possible. Look at every step in the process to see if each one is absolutely required. There is no time for “nice-to-haves” that are convenient for the bank but impose even a single extra click or key by an end user.
Choosing the Right Integration Partner
While some banking executives have paid lip service to a single vendor approach to technology, the risk is generally too high for any institution to take that approach. Even if a single vendor did offer everything required for a fully digital approach to the business, a critical failure on the part of the vendor could shut the bank down. Try to avoid “vendor lock”, where you become a hostage of the vendor.
Instead, we often see institutions working with a number of technology partners who together provide the right mix of tools to meet the bank’s goals. The challenge here is that without an objective integration partner to help fit these tools together, problems get kicked around from vendor to vendor and solutions are harder to come by.
A good integration partner can work like a general contractor in construction, guiding the technology initiative to completion by working with all of the technology vendors and monitoring progress and performance.
Any change that has ever taken place in any institution has had to overcome the natural inclination of humans to stay the course. Inertia and a general unwillingness to take on a new approach has killed many technology initiatives before the tools were even turned on.
We’ve written about successful change management previously and will likely write about it again in the future. It will continue to be a challenge for any institution that seeks to lead through change, which is the only way to maintain a leadership position in any industry.
Getting to the Finish Line
In the end, only those who can finish the race to digital will be competitive in the future. Consumers will not support financial services companies that fail to meet their expectations, not when they have other choices.
We’re always open to having discussions with companies that are running their own race toward digital and stand by to offer any advice and insight we have at any time.