Answering the question “What is Digital Transformation?” can mean different things to different people, but you can at least put it into a sentence.
“Digital transformation is about bringing about change, along with technology, to answer traditional problems for people.”
However, trying to answer what it means for your organisation can be more difficult, but ultimately it involves a deep understanding of where you are now and where you want to be.
So what is Digital Transformation?
Everyone has heard of ‘disruption’ within the context of various industries. This is where a technology, combined with an effective business model, brings about upheaval to an entire industry or sector.
Banking customers had a problem. They felt that transferring money abroad was expensive and often involved far too much effort when all they were trying to do was give someone their own money.
Challengers have entered the payment services space. For example, Revolut, Monzo and TransferWise have all set out to make payments quicker, easier, and cheaper for their customers. They achieve this through lean, standardised operating models combined with smooth customer journeys on mobile devices and equally as effective back end technology, using AI or robotic process automation. Using this, they have been able to take significant market share from major banks. The customers of these ‘disruptors’ just pick up an app, scan their thumbprint, and transfer money for a fraction of the price, in a fraction of the time.
Why it’s not as easy as upgrading technology and setting out a process
The example above involved new firms with new products. When looking at technology and business change, this provides you with some advantages. In our experience, larger organisations with legacy technology are more likely to find that change takes longer, or that the business is more resilient to it, as there is a dependency on existing people, processes and technology.
However, it’s not plain sailing for a nimble, agile FinTech either. Their competitors have large amounts of capital to invest into emerging technology, can afford to take risks, and often have a well-established strategic vision for their organisation, and an understanding of governance and industry best practice.
Another key consideration is alignment. Digital transformation is all about answering people’s problems with technology. This is different to introducing a new operating model and introducing new technology. They have to complement each other in order to realise organisation wide benefits after delivering them.
It’s not enough to align the staff to the changing processes and technology, it also has to make sense to number one. The customer. The earlier examples have a clearly understood and defined customer journey. You pick up the app, and away you go.
Otherwise, what unfortunately happens is that expensive technology is not adopted by the people, and/or the operating model struggles to meet its requirements and expectations.
At Purple, we’ve always found that a holistic approach that is mindful of these things from the outset is what is key to securing the return on investment you’re setting out for.
What are the challenges Financial Services firms face in an increasingly digital world?
The CEO of Citibank once said that Citi was a technology company with a banking license. It’s not just a witty quote, but is the way that the financial sector, in our opinion, need to start thinking.
Traditional banking was often about numbers, mathematics and relationships. Now, there are machines that can do a lot of this for us, and we can have new digital relationships with customers and manage our own relationships with these customers digitally also, making things easier for the people in the organisation.
Firms also need to love their data. It’s not just enough to gather a lot of it. If you’re taking the step to introduce apps or a new website, think of the information you can gather from that customer, but also how you can use it. If a customer likes to complete certain transactions online, are they completing that transaction in the way you designed for them? You can continually enhance the customer journey using this information, and continue to realise even more benefits.
Moving cleverly on from data, we need to talk about regulation. You’ve all received more emails about GDPR than you can remember. But as well as the GDPR, the payment services directive has opened up banking for the benefit of its customers and introduced more competition than before.
How we can help
Purple have a proven track record in the above concepts, and have helped many firms with digital transformation and their long-term digital journey. Having read this, if you’re starting to think about what your organisation’s digital future may look like, don’t hesitate to get in touch using this link.