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The Case for Banks to Digitally Transform: Iterating out of lockdown

By Sudeepto Mukherjee, Senior VP, Banking EMEA & APAC, Publicis Sapient.

Before COVID-19 disrupted every imaginable part of society, banks were feeling confident and secure in their digital transformation progress. While recognizing that they had a way to go, progress was seemingly “on-track”. Then without notice, every contingency plan went out the window. Suddenly, branches had to shutter-up and crucially, workforces had to become entirely remote, while customers were forced to go to call centres and digital channels to meet even their most complex needs, increasing volumes drastically.

The response to COVID-19 from banks was, while swift, a set of short-term tactical actions to respond to both the technical and health & safety needs of both their workforce and customer base as well as the fast-changing market conditions, like government mandated lending to small businesses and the crash in spend. These tactical steps still required large manual workarounds increasing cost and impacting customer NPS.

This coupled more complex servicing with a totally new way of working; and what it has highlighted is that banks have much further to go, and faster, in terms of digital transformation. True strategic digital transformation, however, has proven elusive for the majority of banks attempting to undergo serious cultural and technical change. As we move out of lockdown, banks must shift perspective to dealing with both the immediate needs for change – things coming in the next six months – and crucially, to the much more serious undertaking of sustained and successful digital change.

Looking past Customer Journeys

Traditionally, digital transformations have failed to create meaningful and sustainable change because banks have embarked on Customer Journey Programmes that mostly improve the user experience of customer channels and uplift the technologies used to deliver these experiences. While this has made customer applications more usable, they have not tackled the more difficult areas like complex business processes/structures, rigid legacy systems and lack of aggregated customer/transaction data that make customer interactions difficult and costly. . This is compounded by a legacy internal and cultural resistance to change However, with a global pandemic radically upending ‘business as usual’, there is an opportunity to embed new practices that enable digital transformation in an accountable, clear and well-planned manner.

Customer centricity

While banks shouldn’t flock to follow the internal structures of their new digital-native competitors, it is crucial that they realise what has made them so successful: customer obsession. This is where an iterative approach to working must be enacted. Using data to deliver an in depth understanding of the customer and their wants and needs, banks must service those needs in a lightweight, seamless, ethical, and engaging way.

As lockdown pushed customers online, it’s likely that this will remain the key channel for interaction and therefore requires primary focus. This cannot be achieved in annual or even quarterly reviews and goal-setting, when the needs of the customer – particularly in this moment in time – change week to week. Therefore, an iterative approach that constantly works to improve, update and respond to customer desires is essential.

From tech delivery to the services offered as we eventually move into ‘normal’ spend activity, only an iterative approach with measurement and accountability built in to understand what works can deliver true customer-centricity. This is crucial: only by actually measuring the successes of the iterative approach against KPIs and benchmarks can banks accelerate and scale the best developments and retire those less successful initiatives.

Successful iteration

Supporting an iterative approach to digital transformation must involve a true reimagination of the operations of the business. Key is decision-making models to support faster decision making and measurement of iterative experimentation. Banks must also reframe the funding and strategic outline of the work; it cannot be a ‘project’ to enhance digital offerings but a continuous product orientation that is always enhancing the product to bring about new sources of value. This, of course, must be supported by cultural change that tackles silos and gives more decision-making power as well as transparency across the process of transformation.

The current crisis has created short-term needs, as customers are in emotionally difficult positions and may need further support and education from banks around managing finances or small businesses. This is something banks must and generally have responded well to. As we look at the longer-term picture, it’s clear that COVID-19 has accelerated hugely what was already happening: the shift to digital has well and truly arrived. Banks must therefore consider now how they can support true strategic transformation, and deliver an iterative approach that allows ongoing and continuous improvement. It requires deep and lasting change with fundamental management principles in place to serve the ultimate goal: customer obsession.

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