We asked many banks what kind of digital organisations they aspired to be. The response from most was: Amazon.
What is the secret of Amazon’s success?
According to Denise Lee Yohn, author of “FUSION: How Integrating Brand and Culture Powers the World’s Greatest Companies“, it is the fusion of Amazon’s culture and brand that powers the company. Everyone is singularly focused on one thing: excellence on behalf of the customer.
She comments: “Amazon’s distinctive organizational culture fosters a performance-driven environment that fires up employees to innovate in pursuit of an outstanding, continuously-improving customer experience. Its brand identity is based on delivering that same disruptively innovative customer experience.”
Easy enough to say, but what does this kind of digital transformation actually mean in practice?
Let’s face it – digital is confusing. While everyone recognises the need to ‘be digital’, talk to 20 different financial institutions about what digital really means for them and you are likely to get 20 different interpretations.
For some, it is a way of emulating the offline world online; a focus on fixing the basics and using digital technology to make cost savings.
But at the opposite end of the spectrum, there are companies that are totally immersing themselves in digital. They are fully inhabiting the digital philosophy; seeing it as a way of radically transforming their business.
What accounts for the difference in approach – and the results? What do the most successful digital organisations have in common when it comes to achieving digital transformation?
We delved deep to find out. We unpacked five key elements vital to any digital strategy: customer, data, technology, trust and culture. The companies that are getting it right are starting with the customer. They are looking at the needs and problems they have to solve and they use that as a starting point.
We have packaged these five keys into a framework that offers a powerful path to digitisation. They are all interconnected, sequential and, most importantly, always have the customer at the epicentre.
Meet the Digital Framework
The Digital Framework starts with the ability to understand customer needs and deliver against those needs, scaling that using a data enabled and open architecture and with security and protection woven into the heart of every solution. New technology is used to stay compliant, to be heard, to be relevant – and ultimately to enable the bank to function in a whole new way so that rather than being an augmented strategy digital becomes embedded in the organisation’s DNA.
Customer: Meet the customers in their life
In the words of Steve Jobs taken from an interview conducted in 1997:
“You’ve got to start with the customer experience and work backwards to the technology. You can’t start with the technology and try to figure out where you’re going to sell it.”
It was true back then, and it’s even more relevant now.
Customer focus is not a new aspiration, but it has received lip-service all too often in the past. How long have we been talking about the customer ‘being at the core of what we do’ and about being a ‘customer-centric’ organisation? The principal of ‘know your customer’ is even enshrined in banking regulation.
But have these pronouncements actually resulted in deeper client engagement and loyalty? Have they turned customers into stronger advocates for your brand? Have they transformed your business?
Generally, they have not.
In the digital world, with the bar for customer expectations set high by the challenger banks and tech giants – and with fierce competition for customer hearts and minds, it’s no longer a question of knowing your customers but of understanding them.
This means developing empathy with your customers – ‘walking in their shoes’ if you like, so you gain a real understanding of their lives and perspectives. It means meeting their life needs and anticipating their unmet needs. It means engaging with them in a meaningful and human way; winning hearts as well as minds.
It’s about making them believe you are working for them.
Data: Open up, get connected and stay relevant
At a macro level, the key to understanding customers is data.
Every interaction with your customers, across all channels, gives you the opportunity to collect data and build up a wealth of knowledge that can be used to fuel the digital experiences you offer them.
Your customers leave traces. The challenge lies in joining all of the dots together, because the most useful insights come from interconnected data. And not all of this data sits within your bank. It is imperative to reach beyond the bank; to make use of aggregation opportunities to gain insight into customer needs and aspirations; to focus on interconnected and integrated data to create intelligence, rather than just a series of interactions.
Enlightened organisations are going beyond the reactive use of data and, thanks to artificial intelligence (AI) led technologies such as
machine learning and deep learning, are using data to understand, anticipate and create new value for their customers.
And the good news is that customers seem to be prepared to trade data in exchange for better services according to Accenture’s 2017 Global Distribution and Marketing Consumer Study.
They would welcome contextual services that are relevant to their life, even if this means giving up more personal information in the process:
67 percent will grant banks access to more personal data, but
63 percent want more tailored advice and priority service or monetary benefit in return
Technology: Make it the enabler – not the end goal
Technology should be invisible to your customers. Things should just happen as if by magic.
The magic relies on having the right technology in place. Scalable architecture enables you to flex to the needs of serving existing and new markets – supported by cloud and a microservices infrastructure. Open architecture allows you to take in third-party data and products and others to consume and distribute your data and products, opening up your customer experience to a fully connected view of their financial health and opportunities.
Your entire architecture should be fully connected and integrated across the entire eco-system of technology, both your own as well as other providers of technology resulting in a 360-degree view of the customer for your business teams as well as for the customer themselves. The benefits of this fully connected and scalable technology result in the ability to unlock customer value across parts of the bank where you typically lose customers e.g. retail to business, business to wealth. The benefit to the customer is in relevant and useful experiences.
Your enabling architecture must be integrated and connected to allow data, the digital lifeblood of the customer experience, to run through it as needed in real-time so customers can do whatever they need to do, whenever they need to do it and via whichever channel they choose.
Enlightened banks are not chasing apps, bots or specific channels. They are focusing on engagement. The entire ecosystem architecture and collection of technologies (payment platforms, machine learning, cloud and banking engines) must enable engagement with your customers.
Trust: Make customers feel safe
Whilst opening up your architecture can create opportunities to collaborate, it cannot be executed at the expense of security. Open cannot mean insecure.
Key to trust is ensuring your organisation has in place a robust cybersecurity strategy – protecting systems and the data from attack or unauthorised access. It covers people and processes as well as technology, but also extends to protecting your organisations reputation and survival. The stakes are high with the average cost of a data breach running at $3.86 million (Ponemon Institute – 2018 Cost of data Breach Study). The impact on customer trust cannot be underestimated and has serious financial implications.
Solutions are at hand. Ever evolving cyber threats mean that correct use of cryptography and digital signature techniques are essential to ensure that only valid instructions from verified account holders are ever acted upon and that all activity is traced every step of the way. Data should be surrounded by a digital ring of steel to ensure that only those authorised are allowed to access it.
Delivering on a promise of trust means ensuring all regulatory needs and governance are met – PSD2 and GDPR have received huge attention of late. However, part of the mix is also your own policy and approach to digital trust as well as what is stipulated by law. Policy, whether forced or volunteered should be focused on keeping your customers as well as your staff safe.
There is a balance though – the balance between security and ease of access; a frictionless ‘sweet spot’ that combines a joyous purchase or access experience with the reassurance of feeling rock-solid safe. Achieve this mix and you add reliability to your brand, product and service. Build this ring of trust and your customers will think : I’m safe.
Culture: Nurture a digital DNA
Legacy thinking is the biggest barrier to achieving digital aspirations. It affects the entire organisational culture and its ability to innovate. Legacy thinking is a heady mix of corporate hypnosis – an unconscious allegiance to the status quo or a resistance to change born from rigid thinking: “We do it this way because this is how we’ve always done it”. This is the very antithesis of the agility required to ‘be digital’.
You may have the customer base, the data and the technology. You may have the vision of where you want to be. But without the intellectual and emotional buy-in of the entire organisation from C-suite down, combined with a culture that embraces design-led and agile ways of delivering new products and services, legacy thinking will remain a barrier to digital success.
The new world requires a safe space to thrive: to experiment, try radical ideas, give collaborations a go – without the fear of being fired for failing. A different kind of risk management is required; one that averts the risk of putting out investment-hungry products that nobody wants or needs.
How do you embark on this change? Do you try to convert your existing business or start from scratch? Do you experiment with ‘lifeboat innovation’ by creating a ‘protected’ space in your business as an incubator for fresh thinking, not bound by what’s already there? Do you need to sever the corporate stranglehold completely to achieve the digital innovation you seek?
With competition from the tech giants, who are creative, agile, lean and seemingly thrive on dynamic change we can’t afford to cling to old ways of doing things if we want to stay profitable and relevant to our customers.
Innovation is not linear, hierarchical or on-demand – and it rarely thrives in traditional command and control structures. By that very definition it creates friction for most organisations. Words like experiment, fast failure, launch and learn, co-create are the very antithesis of the traditional banking culture.
The thing is, in the digital world we all have to move out of our comfort zone.
As you work through the five key elements of the Digital Framework, discomfort will be part of the journey. But don’t let it hold you back. Let the Framework guide your digital strategy, but always meld it to meet your bank’s purpose.
It will provoke new ways of thinking and acting that can help you to become an organisation more capable of being digital rather than just doing digital.