Digital transformation in banking and financial services: the new frontier

Why financial institutions must prepare for a world where customers – and employees – seek competitive digital solutions

By the team at Slack18th October 2019

A few years ago, the then CFO of JPMorgan Chase Marianne Lake made ripples in the financial services sector when she announced to investors, ‘We are a technology company.’ At the time, the company reportedly employed 40,000 technologists to create intellectual property for the firm. It also touted a $9 billion technology budget, spending $2 billion on security and cybersecurity alone.

But why would a well-established financial firm such as JPMorgan Chase spend billions on tech? To help the company and its employees meet the demands of the ever digitally savvy consumer.

After all, companies in the financial sector face a growing list of challenges that increasingly require digital solutions. According to a PricewaterhouseCoopers survey, these challenges include:

  • Declining branch traffic while consumer expectations are on the rise
  • Surging competition from non-traditional players such as Amazon and Google
  • Rising regulatory pressures that are compressing margins

JPMorgan Chase recognised that its competitive edge depends on providing innovative and competitive consumer technology. And to do that successfully, the banking and financial services company realised that it would also need to invest in its own digital transformation in banking and financial services – i.e. equip its employees with the best tech and tools needed to do their best work.

If financial institutions plan to keep up with – or better yet, outperform – the competition, they need to adapt to the digital age sooner rather than later. Here’s how financial services companies can successfully ride the wave of digital transformation.

What are the benefits of digital transformation in banking and financial services?

In order to meet consumer demands and match today’s pace of innovation, financial leaders are looking to implement digital transformation efforts to keep companies competitive, albeit at varying speeds. According to Deloitte, 37% of respondents at financial services firms surveyed say that their firm’s culture has been deliberate and cautious in its digital transformation journey, while 38% are more advanced in their adaptation. Twenty-five percent are surpassing their peers.

Often, digital transformation begins with the adoption of digital workplaces, where collaboration and teamwork are facilitated by technology rather than by a physical location. By investing in digital workplaces that connect employees and subject-matter experts across departments and geographical locations, companies can provide:

  • Greater alignment between teams, resulting in faster and more accurate customer service
  • The ability for teams to automate administrative tasks and customise workflows, freeing them up to tackle more complex and challenging work
  • Speedier escalation and resolution for critical incidents
  • Broader organisational transparency

How to get the ball rolling on a company-wide digital transformation

The digital transformation journey is unique for every company but there are best practices available for getting started. By focusing on employee needs, processes and tools, company leaders can gain momentum and get employees to buy in to their digital transformation strategy.

‘Digital transformation must be a clearly articulated strategic priority, supported by appropriate funding, talent recruitment, openness to new agile ways of working, and a willingness to take risks.’

Boston Consulting Group

1. Supply the vision

Change is stressful, especially an undertaking such as digital transformation in banking and financial services. The key for senior leadership executing a digital transformation, according to the Boston Consulting Group, is to be wholly committed to radically changing the financial institution: ‘Digital transformation must be a clearly articulated strategic priority, supported by appropriate funding, talent recruitment, openness to new agile ways of working and a willingness to take risks.’

Don’t forget to reinforce the why when you articulate the digital transformation taking place and to regularly highlight benefits for both employees and customers. This will inspire a sense of purpose and help employees to stay motivated.

Remember to also take a step back as you share your vision and listen to employees’ concerns or challenges throughout the process. Be prepared to change tack if people are struggling to adapt to this new way of working.

2. Provide ongoing support and learning programmes

While it’s important for senior leadership to help people to get to grips with new processes, tools and infrastructures during a company-wide digital transformation in banking and financial services, it’s hard to guide everyone at once. In order to provide ongoing support, create an internal champions network to help to keep momentum going.

Champions are specially appointed fans and experts of digital transformation within regions, business units and departments who can lead digital changes and bring the best practices with them. They can be nominated by managers who have noticed their aptitude and positivity. Or, more often than not, champions can emerge organically during a company’s digital transformation, raising their hands and volunteering to help their colleagues.

Make it a point to also provide company-wide skills training for new tools and processes being introduced during the digital transformation process. Invest in employee learning and development opportunities that will help them adapt to changes and thrive in a new digital workplace. Nurturing your employees’ growth will support your digital transformation and keep employees engaged.

3. Invest in digital tools that enable collaboration

Establishing a collaborative digital workplace creates a strong foundation for a company’s digital transformation in banking and financial services. After all, technology is rapidly reshaping the financial services workforce according to a PwC report and many firms now find that they can replace entire processes with fully digital cores and tools.

That’s why it’s important to invest in technological tools that enable knowledge sharing, company-wide collaboration and knowledge management such as:

  • Document managers such as Box
  • Content databases or internal wikis such as Confluence
  • Workflow management software such as Asana or Smartsheet

By making information searchable, manageable and readily available, employees can avoid working in silos and instead focus on delivering top-notch financial services and competitive customer experiences. Once you’ve established a digital workplace, ensure that your company’s databases, tools and applications are interoperable. That way, your company can optimise data analytics efforts and operating patterns, while developing new cloud-based services more quickly. PwC recommends that you prioritise:

  • Updating your IT operating model
  • Simplifying legacy systems
  • Taking software beyond the cloud
  • Adopting robotics/artificial intelligence

Embrace the change and lead the charge

A company-wide digital transformation in banking and financial services isn’t without its obstacles and there are no shortcuts. But ultimately, it will make your business more innovative, keep your employees more engaged and help to grow your customer offerings. By investing in a digital transformation, you’re investing in your company’s and employees’ capacity to be nimble, competitive and, most importantly, adaptable in today’s financial world. 

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