The digital transformation of banks: a question of mindset

Digital transformation of banks. Words that sound obvious, and almost like an injunction. Words that seem to have the power to solve everything in our constantly changing world. In the face of plummeting interest rates and shrinking margins, in the face of the economic context and the ongoing crisis that never ceases to worry, in the face of the new players emerging and claiming their share of the cake: transform yourself.

But here’s the thing. When you’re a banking institution that was founded several decades ago, or even more than a century ago, with hundreds of thousands of employees around the world, a complex IT infrastructure and a deep-rooted concern for compliance, undertaking a digital transformation is far from easy.

Integrating digitisation into the corporate culture

But we have come a long way. Fintechs have accelerated the movement. Small, agile, fast and technological, they have reshuffled the cards in the banking sector in just a few years. In their wake and with their collaboration, the traditional players have begun a major transformation of their customer pathways. Today, basic banking operations – transfers, account queries, changing credit card limits, etc. – are fully digitised at most of the major banks. Some more complex operations – taking out a loan or managing a 100% portfolio – are in the process of being digitised. Artificial intelligence has led to the emergence of new forms of automated advice (robo-advisors), opening up a wide range of possibilities.

But much remains to be done, particularly in terms of internal processes, which are clearly lagging behind. Siloed organisations, cumbersome processes, the crushing weight of regulation… traditional banks are still finding it extremely difficult to transform themselves from within.

The question is how. How do you make a success of your digital transformation, even when you don’t have the culture, youth or natural agility of a start-up? How do you make obvious what is not (yet) obvious? How can we bring about far-reaching change, not just through technology but also, and above all, through people? Because let’s be clear: digital transformation is not about technology, it’s about people and their mindset. The most effective technology will never have any effect if it is not accompanied by an appropriate corporate culture, combining agility, cross-functionality and customer focus.

Agility and cross-functionality: two necessary ingredients for a successful digital transformation

A company becomes agile when it adopts shorter development cycles and gives itself the right to do things differently. Today, legal and compliance departments carry a great deal of weight within banking institutions. Operational teams are subject to a battalion of prohibitions, constraints and obligations – linked to security, legislation and internal policies – which put the brakes on innovation and perpetuate a certain reluctance to try something new. The solution in such a context is to experiment on a small scale, to launch pilots in order to test while limiting risk-taking and outcry.

Successful digital transformation also means developing cross-functionality. Quite simply, it means encouraging dialogue between all parts of the business. One of the biggest obstacles to the digital transformation of banking institutions today is the way they are organised in silos and the lack of communication between the different business lines: all too often, the IT teams work without consulting the operational teams or the Compliance department. The challenge is to create, upstream of each new project linked to the company’s digital transformation, multi-disciplinary teams bringing together all the company’s entities, including general management. It is by getting all the stakeholders on board as early as possible and capitalising on their complementary skills that banks will be able to make a success of their digital revolution.

Last but not least, any digital transformation process for banks needs to take real account of customer expectations.

A transformation project that does not meet any real needs, or that does so poorly, is doomed to failure. Over and above the traditional satisfaction surveys – which focus solely on the existing situation – the key is to listen to your customers and understand their precise needs and vision in order to develop the most appropriate solutions.

The digital transformation of banks is underway, but progress is slow and still comes up against a number of obstacles that have more to do with people than with technology. The priority now for the major banks must be to lay the foundations of their corporate culture and rethink the way they organise and interact with each other. By seeking to respond in an ever more relevant way to this simple yet fundamental question: ‘how can we learn to work better together?

The pessimist sees a problem in every opportunity; the optimist sees an opportunity in every problem. Winston Churchill

Only companies that are able to adapt quickly will be in the best position to remain competitive once the crisis is over. We offer a remote diagnostic service to help you with your transformation plan.