Becoming a ‘Digital Bank’ Requires More Than Technology

As financial institutions work to digitally transform their business, there is a need to go beyond simply buying new technology or deploying new solutions. To succeed, retail banking leaders must build a culture supportive of meeting consumers' rapidly increasing expectations.

Virtually all financial institutions in the world are focused on making their organization ‘more digital’. From overhauling back office operations to leveraging new technologies to increasing customer engagement, the requirement to understand and respond to the needs of the digital consumer has never been greater.

We’re not talking about small changes here. In most cases, what’s required is large-scale change that typically takes years to accomplish. It would include new technologies, strategies, processes, skill sets and a complete disruption of legacy organizational structures — moving from a product focus to a consumer focus.

This digital transformation cannot occur without the rethinking of the back-office processes banks and credit unions have had in place for decades, including a streamlining of operations and the integration of new data sets. But the most impactful transformation occurs with customer-facing engagement, including products, communication, customer-service tools and marketing strategies. In the end, it is all about creating contextual engagement across multiple channels.

The Marks of a True Digital Organization

Becoming a digital organization is significantly more than simply providing online and mobile functionality. It requires supporting consumer engagement across all channels seamlessly. It also means simplifying all consumer interactions with modern technology. A ‘true’ digital organization focuses on the customer experience at every point of contact, throughout the entire customer journey.

Becoming a digital organization is an overarching process that involves employee activities and behaviors. This includes the way employees interact with other employees internally as well as with people externally. In many instances, the roles, responsibilities and organizational structure must change to accommodate this digital transformation. Not surprisingly, there also needs to be a culture instilled that supports the new digital organization while enabling the company’s strategy.

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The Importance of a Culture Shift

While many banks and credit unions focus on technological aspects of digital transformation, it is clear that culture is the most important key to success. Culture represents a shared set of values and behaviors that define how decisions are made and strategies are implemented. All C-level executives, the board of directors and, indeed, all levels of management throughout a financial institution must support the culture.

A strong culture guides all employees to act in accordance with set guidelines supporting the DNA of the brand as well as the institution’s goals and strategies. Ignoring culture as part of digital transformation puts the entire change process at risk while also impacting financial performance.

A bank or credit union with a digital culture can make decisions and deliver results faster since the organization is more data-driven. Most digital organizations use technology to assist with performing more rudimentary tasks, enabling employees to make more complex decisions more efficiently.

A digital culture is significantly more customer-centric, with latitude given for employees to make decisions on behalf of the customer. A digital culture also supports creativity and innovation — again, on behalf of the customer.

“Now more than ever, organizations that are more digitally adept have the upper hand when trying to recruit the talent needed to excel in a digital economy.”

Now more than ever, organizations that are more digitally adept have the upper hand when trying to recruit the talent needed to excel in a digital economy. Millennials and individuals with advanced technical capabilities are much more likely to want to work at financial institutions that have built a reputation for providing a collaborative and creative environment. With demand for digital talent far exceeding supply, being viewed as a digital leader has never been more important.

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Defining Components of a Digital Culture

While there is no exact science to what is required in a digital culture, there are several components that usually are present.

Innovative. A digital culture is supported by a ‘hunger to learn with a permission to fail’ mentality, where employees are encouraged to embrace change while being risk aware. With data at the center of innovation, there is development of new ideas based on facts and trends. There is the encouragement to think out of the box instead of doing ‘business as usual’.

Data-driven. Beyond simply using data and analytics to review past performance, a digital organization leverages real-time insights to drive instant shifts in decision making on a customer-by-customer basis.

Consumer-focused. A digital culture is focused on the customer journey, where ideas can come from outside the organization and where improving the customer experience is central to all decisions.

Collaborative. The working environment, both physical and virtual, is often not structured around products and services, but with intermingling of departments, functions and products. This ‘open’ structure supports agile decision making and much greater cross-departmental interaction on behalf of the customer.

Responsive. In a digital culture, there is an emphasis on speed. Adjustments to opportunities and threats are made incrementally based on market trends and consumer needs/behaviors. Flexibility, scalability and agility become vital assets, with perfection sometimes sacrificed for being first in the marketplace with a solution.

Transparent. Potentially one of the most important components of a strong digital culture is transparency. Individuals throughout the organization must feel safe to take chances, share ideas and interact in ways that may not have been the norm previously. In addition, management must clearly communicate all strategies, goals and objectives.

A digital organization must be built in anticipation of change. This will alter the way almost every organization operates, requiring new processes, skills, products and approach to meeting consumer needs. Employees must be prepared to accept change, be aware of the ways change can impact their work, and be willing to disrupt themselves as needed in order to cope with the new digital culture.

In the end, a good strategy or great technology will not overcome a culture that is not in alignment with the transformation taking place. If leaders within an organization do not engage and get the support of employees at all levels, digital transformation efforts will fail. Leaders will need to embrace and display the change in behavior desired, acknowledging and rewarding those who exhibit the correct mentality at every chance available.

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