Don’t Forget Your Bank’s Strengths in Pursuit of Digital Transformation

Every financial institution is working on digital transformation initiatives to become future-ready. While rethinking business plans to take advantage of new opportunities, however, banks and credit unions can't ignore their core customers and the advantages that served them well in the past.

I have often said, “Change is happening faster than ever before, and it will never happen this slowly again.” Between economic volatility, increasing competition from traditional and alternative solution providers, and heightened customer expectations, keeping pace with an evolving banking ecosystem has never been more difficult. At the same time, the opportunities have never been greater.

As legacy banks and credit unions invest in new data and analytic capabilities, rebuild back-office processes, modernize core technologies, and innovate around products, services and delivery channels, it is important not to lose sight of the customers and capabilities that got your organization to where it is today. Build from your core differentiators towards a better future.

Remember Your Core Customers

As referenced in an MIT Sloan Management Review article,  “Living in the future — being preoccupied with what might be — can distract individuals from being in the present.” The article continues, “A leader must have a strong hold on the future, but even more critically, leaders must not forget the business fundamentals of the present. First and foremost is the value proposition for your core customers.”

Most banks and credit unions are seriously considering changes to their business models to take advantage of emerging opportunities. In doing so, it’s important that they build on existing strengths. As opposed to looking for the “next big thing,” most organizations are better served to embrace incremental evolution — but do it at speed and scale. As new innovations and processes are introduced, financial institutions must monitor the impact of their efforts both internally and externally.

Don't Sacrifice the Present:

Becoming future-ready doesn’t mean you can forget the needs of your customers of the present.

The transition between the present state and the future state is difficult for individuals and organizations, as it involves the moving away from what was once considered routine and comfortable. The most predictable response to any major or minor change is resistance. Customers, employees, and organizations may need time to integrate and get comfortable with change.

Read More: Digital Banking Transformation Requires Speed and Scalability

Financial institutions can implement change more seamlessly by informing their employees regularly about the organization’s vision, the components of the change, the competitive environment, customer expectations, and the expected benefits for the customer. This approach makes employees aware that change is inevitable and will ultimately safeguard rather than threaten their future. This comfort level empowers employees to help existing customers with the change being undertaken.

According to change management specialist Gregg Brown, there are several ways to ‘soften the blow’ for existing customers who may feel negatively impacted by change:

  • Analyze change from the customers’ point of view. Get customers involved by testing out the changes with them. Listen to and acknowledge customers’ concerns, while modifying the change and the way the change will be introduced.
  • Don’t assume digital acceptance. While the pandemic forced almost all consumers to embrace digital to some extent, not everyone has the same level of digital adeptness. Customers with lower comfort with digital channels must be supported. Employee engagement with customers around technological education is key.
  • Measure impact of change. Sales is not the only measure of success with change. Tracking existing customer engagement over time provides a better picture of how successful your change was.
  • Be transparent. Be very clear with customers about what they can expect through every step of their customer journey post change. As with employees, there is no such thing as over-communication when change is involved. Illustrating empathy to customer needs and how change will positively impact their day is imperative.
  • Remain committed but flexible. Commit to your vision for future success, but be willing to ‘fail fast’. Be willing to adjust your plan as customer needs and requirements change, and as new technology is available.

Read More: How to Mitigate the Risks and Pitfalls of Banking Transformation

Blend Existing Experience With New Skills

As financial institutions and employees adapt to new technologies, new business models, and new processes, the skills needed to succeed are shifting rapidly. With a tight labor market, this creates a challenge as organizations try to find or develop the skills they need within existing workforces.

While formal training still has a place, it’s often too slow. An alternative is a dynamic process that leverages existing skills and uses trained employees to up-skill counterparts. Using data to identify these skills and tailor the learning delivery allows change to be integrated within existing processes.

Transparency around changes that are occurring and the impact on existing employees is a key to success. According to Gartner, 97% of employees report that they would learn a new skill if given the opportunity. Yet only 39% percent believe their organization is effective at helping them understand how information about skills applies to their own context. Employees must understand that they are needed … even as the role they have become used to is disrupted.

Engage Employees:

Leaders need to be clear about evolving skills needs — even when plans are uncertain — and how these changes are likely to impact specific roles.

According to Gregg Brown, “Established employees can benefit from reframing their perspectives to keep up with the pace of change around them, and organizations benefit from retaining loyal talent that has a wealth of institutional memory.”

Read More: Crisis as a Catalyst for Leadership, Digital Transformation & Cultural Growth

Success Rests With Leadership

Effective banking leaders embrace change, are willing to take measured risks, and have an eye on the future. They provide the motivation for change and get people involved. They create a sense of urgency and effectively communicate the rationale for the change, and empower others to get things done. They also encourage measurement of results, are willing to ‘fail fast,’ and recognize those that achieve results.

When building a business plan for the future, there will be debate and discomfort. Good leaders encourage active discussion and make the tough decisions. They ‘walk the halls’ and ask the uncomfortable questions to determine where potential problems may exist.

Finally, they look outside the organization to determine if their institution is truly customer-centric … for both existing and prospective customers.

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