Digital Banking CX Boils Down to One Word: Speed

With the onset of COVID-19, financial institutions made decisions quickly ... in a crisis mode. New solutions were created and deployed and new processes were leveraged to facilitate a remote working reality. As the industry moves away from crisis mode, banks and credit unions must find ways to keep the focus on speed of execution to compete and succeed.

Most financial organizations realize that speed is a competitive weapon. The ability to see market trends, adjust strategies, innovate, create new solutions, make tactical decisions, and deploy resources quickly provides a business advantage at a time of unprecedented change. The impact of the pandemic has only heightened the awareness that banks and credit unions can no longer respond to opportunities and challenges with a legacy banking timetable.

With consumers making adjustments to the way they perform banking transactions and manage their finances, and with technology opening the door for leveraging data and insights in real-time, the stakes for ‘being fast’ have never been higher. In fact, according research from McKinsey, “Fast organizations outperform others by a wide margin on a range of outcomes, including profitability, operational resilience, organizational health, and growth.”

Even before COVID-19, leading organizations organized for speed in response to new technologies, consumer behaviors and competitive trends. As we have found in research for the Digital Banking Report, there is a heightened advantage to ‘pioneers’ compared to ‘fast followers’, ‘mainstream players’ or ‘laggards’. Business as usual no longer exists in a marketplace where speed is everything. As opposed to being a threat, speed provides endless opportunities for financial institutions.

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COVID Changed the Scope of Digital Transformation

Most financial institutions have moved away from crisis mode as it relates to the pandemic. That said, the onset of COVID-19 made many performance gaps evident, impacting virtually all areas of the organization. From business objectives to tactical delivery, priorities of resource deployment are being analyzed for market strengths and weaknesses as well as internal opportunities and threats. In other words, the strategic planning process for 2021 is being upended.

Banks and credit unions need to look at the organization from the inside-out and from top-down. Many need to determine if the current leadership and culture of the organization is prepared for the seismic changes required to respond to what the marketplace requires. According to the research from McKinsey, more than half of leaders surveyed across industries are considering or planning large-scale changes in areas as diverse as: how meetings are conducted, how leaders lead and change culture, how technologies are deployed and systems updated, how talent is secured, how innovation is supported, how the business is organized and stakeholders interact, and how collaborations with outside ecosystem players are created.

The vast majority of these changes were not short-term, but expected to be transformational over time. This even included the perspective of the future of remote work post-crisis.

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From Reactive to Proactive

When asked why so many changes were being made at the same time, the respondents to the McKinsey survey mentioned speed and productivity the most often across industries. In banking, productivity was the most commonly cited reason for changes to be undertaken, with speed being the second most common response.

It is interesting that, compared to pre-COVID reasons for change in banking, the need to reduce costs was not mentioned as one of the top three reasons for change (customer experience was the third most mentioned reason). While this prioritization may change over time, it is a positive sign that banking has moved away from a mentality of cost reduction.

One of the major drivers for speed being an area of focus is that faster organizations report significant improved performance across a number of key performance criteria, including innovation, growth, net promoter score (NPS), financial performance, organizational health and resiliency.

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Organizing for Speed is Tough

Despite the realization that speed is important for positive performance across the organization, it is not easy to achieve. It is not simply a matter of ‘doing things faster.’ In fact, most institutions are not organized for speed due to organizational silos, slow decision making, lack of strategic clarity, legacy policies and the presence of a formal hierarchy.

While none of these challenges should come as a surprise, the impact on the organization increased as a result of COVID-19. According to the McKinsey research, “When asked for specific ways in which organizations have made changes to deliver results faster, leaders most frequently report increasing productivity through the use of technology, sharpening their focus on customers, and improving communication to expedite decision making and collaboration.”

In another McKinsey research analysis, there are many ways to improve the speed of an organization, including rethinking the way work is done, the way an organization is structured, and the way talent is deployed. More specifically,

  1. Speed up and delegate decision making (fewer meetings with fewer people involved)
  2. Improve execution excellence throughout the organization
  3. Build partnerships with outside specialists
  4. Flatten the organization structure
  5. Deploy agile, cross-functional teams
  6. Allow for new hybrid working engagements
  7. Empower potential future leaders
  8. Encourage lifetime (ongoing) learning
  9. Test leadership teams as opposed to single leaders

Technology and innovation become integral components of ‘making speed happen.’ According to research done by the Digital Banking Report, most leaders believe their organizations under-perform on digital delivery and engagement. In fact, more than 75% of financial institutions said they were ‘not adept’ at the most fundamental aspects of digital transformation. This was despite the fact that virtually all respondents believed that technology and digital engagement are required for the future of digital banking.

As financial institutions pivot and evolve in a COVID impacted world, failure is also inevitable. Banks and credit unions need to be able to fail fast, learn quickly and build better. Failing fast avoids the over commitment of resources to initiatives without a viable future, providing the opportunity to recommit to other initiatives with more potential reward.

“Given the evident benefits of organizational speed, the question isn’t whether speed is important, but whether organizations can afford not to build speed into their culture and processes,” states McKinsey.

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