The Year Digital Gets Real
On March 8, 2018, Synechron organized a ‘Digital Round Table’ at its London office. With representatives from various large financial institutions, the discussion revolved around what digital is, what it can do for the financial services sector, how it is being used within the different companies right now and how it will be used in the future. In the end, the greatest challenges facing financial institutions today and how to get from prototyping and developing Proof of Concepts (POCs) into production were discussed too.
At the outset, everyone agreed that all financial institutions want to go digital. But what does that really mean? Digitizing current products and services is completely different from developing new business models and products based on new technologies. And is digital different from technology? Or is new technology digital?
When the term Digital was being defined, different meanings clearly started to emerge including: Digital as a new way of engaging with customers and customer experience or digital as an entirely new way of doing business. Importantly, many suggested that data is at the heart of all digital innovations; and therefore, there is an important role for the Chief Data Officer (CDO). But to get truly digital businesses need support from Information Technology (IT) to get systems ready and the business to get the knowledge and ownership of (new) products and services.
The next question that arose was whether an organization has achieved becoming a digital enterprise if it has the CDO, IT and Business in alignment? The common view was that a lot was ideally needed to do to go truly digital. Businesses need to work agile as a whole to be able to implement new technologies. This is a big challenge for most large global financial institutions. They have to deal with legacy systems and old processes that need to be changed first to become globally agile. It doesn’t really matter if the digital and innovation teams are centralized or work decentralized from the business lines as long as they can work in an open and agile environment where they communicate and share knowledge within the whole organization and digital initiatives have buy-in from both IT and business.
Key drivers for getting digital are also very diverse and range from a real drive to create excellent customer experience and centricity, where we see a clear shift within financial institutions into placing the customer central when working on internal change and innovation, to the fear of being taken over by a FinTech and the threat of new entrants and new technologies and run out of business. For the next 5 – 10 years financial institutions need to focus on both getting existing products digital and creating new products using new technologies.
Most financial institutions see the need to get innovation started from within their own organization. They encourage employees to contribute to innovation by organizing hackathons and dragon dens, bringing internal ideas from employees into projects and even into start-ups. They have teams that look at the external world as well and work on Fintech incorporation and crowdsourcing from the Fintech community. They invite unicorns like Google and Amazon to give presentations to their employees for inspiration and aspiration. They realize that in the war for talent they need to change to attract the new generation who desires to work in an agile, open, challenging and innovative working environment.
Most financial institutions have a huge amount of digital initiatives going on and are investing in partnerships with FinTech companies and start-ups. We see that growth and digitization are the 2 big things now. While last year financial institutions were all building POCs, this year most of them are running major digital change programs and facing the challenge of getting on the path to production. Lastly, one piece of wisdom that came across is that “Digital is a reincarnation of technology; there won’t be digital without technology.”
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