Since the pandemic disrupted the world as we knew it, financial institutions had to rethink the way work was conducted, how products and services were built and delivered, how consumers were communicated to, and the vision for the future. The industry had to react to unexpected opportunities and challenges in an instant, sometimes opting for less than perfect outcomes.
Over the past several months, product and service gaps rose to the surface. Outdated processes and procedures hampered the ability to deliver what consumers desired. The pandemic highlighted where financial institutions were falling short of expectations. While some (few) organizations were well prepared, others were forced to change course in a more piecemeal manner.
As we look to 2021, incremental changes to last year’s strategic plan will be insufficient. Organizations will need to make assumptions around the state of the banking ecosystem, identifying gaps that require immediate attention, and re-setting priorities and investments appropriately. Digital banking transformation is no longer optional … it is a matter of survival.
Read More:
- Banking Innovation Push without Cultural Shift is a Failing Formula
- Digital Transformation Requires More Than Technology Upgrades
- Banking Must Bridge the Growing Digital Transformation Skills Gap
Importance of Strong Leadership
It is during times like these that strong leadership is required. It is one thing to lead during a crisis. It is entirely different to maintain speed and agility as part of an ongoing strategic mission. How do organizations keep the momentum going? How does a bank or credit union reflect on the gaps that were amplified when the world came to a screeching halt?
But don’t simply limit the view to what took place during the past few months. Put all that was learned in the context of what your organization was already working towards before the pandemic, and where you believe the industry will be five years from now.
For instance, it is one thing to be able to allow consumers to open a new account or apply for a loan digitally. It is entirely another to make the process as fast and simple as the strongest competitors in the marketplace. Leaders must set the vision for the future, while clearing out the obstacles that prevented digital transformation in the past. What stands in the way of changing the legacy processes, upgrading outdated infrastructure or upskilling current employees to move beyond status quo?
According to BCG, “It’s important to appeal to people’s deepest motivations in a positive way — to establish the aspiration for new possibilities that the organization can achieve, rooted in a broader purpose — and to galvanize people around that aspiration.”
Moving Beyond Comfort Zones
Leaders at all levels of a financial institution must move out of their collective comfort zones to embrace the change that is needed in the future. Leaders must articulate the new vision at the beginning of the strategic planning process, motivating and delegating to others within the organization, eliminating fear and confusion around the massive changes to business as usual.
The good news is that, while change can be painful, leading change is easiest when change is already occurring. With everyday life at home and work completely disrupted and in a state of constant flux, collaboration and productivity have increased as people instinctively pulled together. COVID-19 also provides the opportunity to take advantage of the massive shift in digitization to advance digital banking transformation significantly more than would have been possible without the pandemic.
What leaders must be cautious of is the potential aftermath of the crisis mode – when the adrenaline and energy of making massive changes wears off. Without continuous engagement and communication of purpose, fatigue and stress can take over. Leaders must shift the mindset to the future state of the business to re-energize the organization. As stated in an article from YSC Consulting, “Leaders need to have the confidence to lay out a hypothesis [for the future] with the humility to expect that some of the predictions will be wrong.”
Don’t Wait for a ‘New Normal’
More than at any time in the past, there is a need to act decisively in developing a transformation agenda. This year’s strategic planning process allows leadership teams to articulate a vision and specific plan for the future that is far different than a modest adjustment to last year’s plan. Organizations must redefine what it means to be a ‘digital bank’ and what is required to be ‘customer-centric’. Leaders must share the vision they have for employees, customers, their strategic partners and investors despite not knowing for sure what the future may bring.
The pandemic made it clear that there is no such thing as a ‘new normal’ in the context that there is no specific end-point to the environmental changes occurring. Instead, strategic planning should be done understanding that the world and strategic plan is iterative, with adjustments made accordingly.
The challenge in the 2021 strategic planning process is that there is no guidebook for success, since so much is still unknown. In addition, last year’s successes, organizational structure, investment priorities and marketplace assumptions represent the realities of the past. In other words, most organizations need to start from scratch based on what has happened over the past 6-9 months.
Most importantly, being a fast follower is no longer a valid strategy, since each institution is vastly different and because change is happening faster than ever. There is no reason to throw out all that was learned in the past, but it is not wise to hold on to past assumptions that may no longer be valid.
Redefining Organizational Culture
The pandemic served as a wake-up call to organizations steeped in legacy culture. It is more clear than ever that the banking business models of the past are both outdated and dangerous to hang on to. Every demographic group has changed the way they do banking and what they expect from their financial institution. From digital capabilities without the need for a branch, to hyper-personalization that uses data to recommend appropriate solutions, the business of banking has been altered forever.
Many organizations have seen positive behavioral and cultural changes emerge in response to the crisis. The pandemic also revealed some less favorable changes. As leaders are building their strategic plan for the future, they must also redefine the culture that they want going forward, reassessing individuals and teams against these transformed expectations.
In other words, this time of disruption is an excellent time to reset the mission, purpose and value proposition of an organization. From the markets that will be served, to the way the institution will engage with employees, consumers and businesses, this is the time to determine what an organization will be known for going forward. But this vision will not be static. Instead, it should evolve and be responsive to the marketplace.
Don’t Forget Your Employees
As mentioned, the pandemic disrupted the way people in the organization worked as well as the responsibilities that many employees had prior to COVID. This was disruptive to both individuals and teams. To be successful in the future, banks and credit unions must not ignore the opportunity (and risks) for new ways of working, new skills required and new motivational models emerging.
Organizations that only focus on the external consumer without paying attention to the needs of the workforce will fail in transformation efforts and the ability to leverage the most important component of success. Companies will need to focus on training and upskilling to provide future opportunities while eliminating fear of being displaced. Creating people-focused initiatives that support the physical and mental well-being of the workforce will not only help the organization and its employees, but also be reflected in customer satisfaction.