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It’s Time to Rewire the Internal DNA in Financial Services

Financial services firms are increasingly relying on digital technologies to improve the customer experience. A study by Deloitte Digital and MIT Sloan reveals that firms may need to shift some of the focus inward, improving the employee experience.

Subscribe TodayThe 2016 Digital Business Global Executive Study and Research Project, conducted by MIT Sloan Management Review and Deloitte Digital found that financial institutions are making significant investments to improve customer experience (CX). In fact, 93% of firms with a digital strategy either agreed or strongly agreed that their objective of their digital strategy was to improve customer experience and engagement.

This type of commitment was important since 90% of respondents to the research either agreed or strongly agreed that digital technologies are ‘disrupting the industry to a great or moderate extent.’ Unfortunately, only 46% of the respondents believed their firm was adequately prepared for this disruption.

According to Deloitte, not enough time is being spent on the employee experience, creating a blind spot in financial organization’s digital efforts. A blending of focus on customer experience and employee experience is believed to be key to better preparing financial institutions for the digital future.

In an interview, Donna Morris, executive vice president of customer and employee experience at Adobe Systems, explained, “By combining employee and customer experiences, we are able to create rich customer experiences through high levels of employee engagement.” In other words, it helps if the internal culture and customer objectives are aligned.

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Attributes of Digital DNA

So what are the attributes of Digital DNA that can help financial organizations improve the employee experience and, in turn, the customer experience? In addition, what is the correlation between each attribute and how it impacts preparedness and the likelihood of employee retention?

Agility

According to Deloitte, ‘agility’ refers to an organization’s ability to move rapidly to make adjustments to a changing marketplace. This attribute does not just mean the ability to change products and services for the consumer, but also change job descriptions, skills and tasks internally.

“Traditional FIs may move slower as compared to a digital enterprise and the uneven velocity between the legacy and digital business is likely to create friction between the legacy and digital operating models,” stated the report. It is felt that the lack of organizational agility may be one of the biggest barriers to being able to take advantage of digital trends.

According to the survey, only 19% of respondents believe their firm is agile. The good news was that 71% of those thinking their firm was agile agreed or strongly agreed that their firm was preparing well for the digital future. Of those who didn’t think their firm was agile, only 34% felt their organization was prepared.

Recommendations on how to build a more agile organization include:

  • Be iterative. Improve based on rapid and ongoing feedback and analytic insights.
  • Fail early and fast. Provide customers a way to test pilots as soon as possible.
  • Allow for easy flow of resources. Facilitate the movement of talent and resources to the area of most
  • Promote innovation. Continuously question status quo and encourage innovation.

Collaboration

As could be expected, the attribute of collaboration involves the cooperation of employees for a common cause. This attribute becomes more important in financial institutions as the need to break down product and delivery channel silos gets even more important. The customer expects a seamless experience, so the internal teams must be seamless as well.

Obviously, since this has been a challenge for multiple initiatives since financial institutions came into existence, getting individuals and departments to work toward a common cause is easier said than done. The need to create teams and work processes to achieve collaboration can’t be overstated.

In the Deloitte/MIT Sloan study, 33% of respondents believed their organizations were collaborative. For those who believed their organizations met this criteria, 62% agreed or strongly agreed that their firms were prepared for digital disruption. This was twice the level of preparedness than found from employees who believed their firm worked in silos.

To improve collaboration, the following recommendations were suggested:

  • Create flexible teams. Build cross-functional teams that can be created and disbanded as needed.
  • Democratize insights. Allow for the distribution of insights across silos to improve customer experience results.
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Distributed Leadership

A focus on the digital ecosystem and the impact on customers is difficult in a traditional top-down organization structure. Spreading leadership across the organization for a customer-focused initiative allows for a broader set of both traditional and non-traditional stakeholders, according to Deloitte.

The research indicated that only 16% of FSI firms surveyed had a distributed organization structure. Of those organizations that did have distributed leadership, 71% agreed or strongly agreed that their firm was ready for the digital future. Of those organizations that had traditional top-down leadership, only 32% felt prepared.

Appetite for Risk

Banking and the term “appetite for risk” aren’t often used in the same sentence, given the tight regulatory structure and the traditional priorities in banking. However, with fintech and tech firm competition, financial services organizations need to adjust this perspective to become digital leaders.

“FSI firms will need to consider ways to be more flexible in managing their risk and security boundaries, likely by continually planning and monitoring activities, identifying large exposures, and focused action planning,” states the report.

Interestingly, 21% of financial services firms thought that they had a ‘bold risk culture.’ Of those that believed this way, 71% agreed or strongly agreed that they were prepared for digitalization compared to only 32% of those who worked for firms that did not have a bold appetite for risk.

Strength of DNA Attributes

While organizations may prefer to focus on one DNA attribute at once, the reality is that success is achieved by trying to move all four key attributed up at the same time. Deloitte and MIT Sloan found that the most prepared organizations (‘Experimental Drivers’) were far better in each attribute than were the ‘Enthusiastic Progressives’ or the ‘Evolving Adopters.’ Without getting into the definitions and attributes of each category (these are well documented in the report (2016 Digital Business Global Executive Study and Research Project), suffice to say that the digital preparedness, employee experience and the investment in digital initiatives follow suit with the rankings.

Rewiring Your Digital DNA

While it is believed that an organization needs to move forward on all four DNA attributes, it is still important to focus on the dual goals of enhancing both the customer and employee experience. It is also important not to change the entire organization overnight, says the report. Incremental, but meaningful changes will have a more positive internal and external impact than trying to ‘boil an ocean.’

The most important thing to remember is that when we try to improve the customer experience, we need to make adjustments internally as well. Changing the internal digital DNA will both reinforce and enhance the impact of our CX efforts.

Jim MarousJim Marous is co-publisher of The Financial Brand and publisher of the Digital Banking Report, a subscription-based publication that provides deep insights into the digitization of banking, with over 150 reports in the digital archive available to subscribers. You can follow Jim on Twitter and LinkedIn, or visit his professional website.

All content © 2017 by The Financial Brand and may not be reproduced by any means without permission.

The Financial Brand Forum 2017 | May 17-19 | Las Vegas

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