Back to Page 1
Legacy systems modernization doesn’t happen in an instant. It is an incremental process that differs for each organization based on institution objectives and anticipated business needs. For most financial institutions, it will involve the integration of cloud computing, mobile technologies, advanced analytics, cybersecurity, etc. The goal is to build a flexible infrastructure that can support existing needs and future innovations.
Just as important as changing legacy technology, financial institutions must completely rethink existing back-office processes that were created decades ago. These processes transcend the roles of product development, delivery, sales, marketing, and customer service. It goes beyond simply using a digital channel to deliver legacy solutions. Digital transformation must begin and end with the customer experience and therefore be built from the inside-out.
All existing processes must be rethought from the perspective of digital delivery, which requires the removal of friction, the contextuality of engagement, and a focus on speed, ease of use, and user experience.
6. Reskill Workforce
The skills needed for embarking on a digital transformation journey most likely do not exist in sufficient numbers in most financial institutions, making talent management and employee reskilling particularly important. While some of the new skills required can be solved through hiring, banks and credit unions must consider a long-term approach to growing their talent base using training and cross-functional deployment.
Beyond the hard skills required for digital transformation, organizations also must consider the adjustment of legacy mindsets that will be required, especially as back-office processes and procedures are rethought. For instance, how does a tenured product manager expand their thinking around how a digital deposit account needs to be built or a digital loan application process needs to be simplified?
Unfortunately, most financial institutions are continuing to under-invest in training in a sector where the skills shortage is particularly acute. In a relatively short period of time as many as two-thirds of current employees will need to be skilled to become “digital workers” and “digital makers.”
We also need to realize that the pace of change has created a reality where the majority of children in primary school today will work in jobs which do not even exist today. In other words, for existing workers or those not yet in the workforce, there will be a need to continually reskill and embrace lifelong learning to be relevant in the marketplace.
7. Align Leadership and Culture for Digital Future
As mentioned often, digital transformation requires more than just updating technology or building new digital applications. Failure to align the efforts, values and behaviors of leadership and employees can create friction and risks within an organization.
Alternatively, when leadership embraces the changes that are needed, and supports a comprehensive and collaborative effort to advance digital transformation, all efforts to “become digital” will have a greater chance of success. Part of any successful digital transformation effort is having the communication and actions support the efforts at the top of the organization. It also requires support and buy-in by those in other levels of the organization, including the same middle management that has been doing things the same way for decades.
In addition to making the goals of the digital transformation clear, and how the process will positively impact corporate objectives and strategies, top management and boards must focus on communicating the cultural aspects that will help efforts succeed, including transparency, accountability, and a willingness to experiment and even fail.
Despite the uncertainty about the course of the pandemic, the time to act is now. Those institutions that do so will emerge more prepared to compete in a ever-changing banking ecosystem, with a stronger value proposition, greater efficiency, and higher profitability.