Other parts of this series:
In this blog series, I’ve covered the pressures forcing financial services institutions (FSIs) to transform into the digital enterprises they need to survive and thrive. I’ve examined the customer-centric banking approach used by the GAFAs— i.e. the likes of Google, Apple, Facebook and Amazon—to disrupt the banking marketplace. And I’ve discussed how banks, insurers and wealth managers can adopt the same approach to effectively and efficiently introduce the new digital products and services that will be critical for attaining a leading marketplace position.
I have found my discussions with senior management at FSIs around the world very encouraging, in that they recognize the importance of digital technology to their organizations’ future. But FSIs will need more than “just” technology. They also will have to adopt four key digital enablers.
The first of these enablers is a digital culture, diffused across the organization. Instead of having a digital leadership literally pushed down by the hierarchy, FSIs will need it diffused throughout, helping evaluate emerging strategic options and determining what is both possible and desirable. Leadership also should look beyond traditional roles when hiring. Instead, they should consider nurturing positions that are more and more important in a digital setting, such as data scientists, digital architects, community advocacy builders, scrum-masters and even storytellers (to weave the customer experience narrative).
Next is “liquid” customer engagement. FSIs should revise their customer engagement and customer relationship management (CRM) so that they generate greater organizational flexibility and agility. The goal is for FSIs, leveraging beyond big data into the data lake, to move more quickly from customer insights to marketing automation to customer interactions. By incorporating these elements along with others, such as mindset segmentation—identifying customers’ emotional desires and expectations—and seamless contextualized interactions—offering the right product or service at the right time and price through the channel the customer prefers—FSIs can move beyond providing real-time services. They can focus on those consumers who most likely are in-market customers—those ready to make a purchase soon. Because of the wasteful marketing spending it eliminates, this just-in-time marketing approach has resulted in far greater growth globally for companies that have adopted it compared to peers that use more conventional marketing approaches (according to Accenture research).
The third enabler is digital information technology (IT) architecture. IT architectures need to be:
- Liquid. They should be highly decoupled and made of granular components so they can be created and/or customized in an agile way.
- Intelligent. This will require embedding robotics and cognitive computing to accelerate process digitization.
- Connected. API-driven IT architectures enable FSIs to integrate easily with third parties and partners.
- Distributed. Using distributed consensus ledgers and smart contracts enable real-time transactions without intermediaries and at much lower costs.
Those four technologies will enable FSIs to create new living services faster, provide new propositions and make current products “instant” without having to change back-end systems.
The fourth enabler is end-to-end (E2E) process digitization. Most FSIs have focused on digitizing front-end processes, but now is the time to digitize “invisible” processes, such as back-office tasks, to provide full E2E digitization. If an FSI has that capability across all of its processes, a customer, for example, might be able to begin using an account just minutes after completing an online application. Digitization also can improve digital processes that exist or co-exist in physical environments, such as branches.