By Malte Scholz, CEO and founder, airfocus 

Everyone in technology and business is aware of the pace of digital transformation. It was fast before 2020, but since the pandemic, it’s become even faster still. With the immediate requirement for a more digital approach, digital transformation became a key priority for banks and other Financial Services (FS) firms.

The pandemic also changed how consumers and businesses used FS products and how they interact with their providers. This has led to FS organisations increasingly managing their services as products, employing product managers to oversee their product strategies and increasing internal effectiveness to be able to compete in a highly competitive market.

Not only does this help ensure more efficient delivery of FS products, but makes internal product management far more effective too. Product managers have become so essential to digital transformation, that achieving it without a product manager is a significant challenge.

The rise of product management

People expect an exceptional product experience from their bank, and if they don’t get it, they are many other providers than can switch to. However, if an organization can deliver an exceptional product experience, it increases loyalty, reduces churn, and can have a tangible impact on growth.

But banks are also adopting product management strategies to manage internal products – not products that are sold but those that support various business capabilities. Exceptional product experience is about responsiveness and efficiency. Banks understood that it wasn’t enough to provide the right products, it was also important to be able to be innovative, agile and responsive to the market.

They achieve this by improving their business capabilities. Being more efficient internally allows banks to be more innovative, effective and deliver a better customer experience. This is why they are also adopting PM to manage internal products, and IT teams in banks are increasingly shifting from project-oriented to a product-oriented approach.

Product management is increasingly viewed as the most effective way to manage internal products, allowing for iterative improvements, delivering more value, and keeping them aligned to business outcomes.

This shift to tie development investment with business outcomes requires a further change, in mentality and approach, and the role of product manager is on the rise. Without this shift, any product program will struggle to achieve its goals, but employing a product manager has an undoubted impact on digital transformation too.

The challenges of digital transformation

Before embarking on a digital transformation initiative, business leaders in FS need to be aware of the critical challenges that other businesses have faced. ERP consultancy and business transformation firm Panorama Consulting Group recently published a report on some of those common digital transformation challenges. Their list of key challenges included:

1. A lack of dedicated IT skills within the organization
2. A lack of organizational change management
3. Ever-evolving customer (internal or external) needs
4. No clear strategy around digital transformation
5. On-going budget concerns and constraints
6. Ineffective data management
7. Inefficient business processes

An internal product manager can effectively mitigate these risks and address the challenges.

Lack of dedicated IT skills: while product managers are a jack of many trades, they know how to work with stakeholders of various skill levels across many departments in a bank to get things done. They know who can do what, how they can help, and where the gaps are.

Lack of organizational change management: product managers are not change management experts (from an organizational perspective), but they know how to change products and processes towards incremental improvements. They can also rally their team around common goals and maintain motivation as they work towards success.

Evolving customer needs: this is partly why product managers have jobs. They are constantly focused on understanding the problems that FS customers face right now while also anticipating problems that customers may have in the future as their needs change. An internal digital product manager is not focused on addressing customer needs, rather their concern is addressing the needs of their business (their business users are their customers).

No clear strategy: product managers work with goals in mind. Goals for their product, goals for their customers, goals for their users, and goals for their business. Digital transformation should never be done simply as a marketing opportunity or to use budget so that it’s available the following year. Instead, it should always be done with specific goals in mind and measurable results to assess progress.

Budget concerns and constraints: while product managers are not always in charge of budgets, they are very familiar with working within constraints to accomplish goals. No product manager has unlimited resources and team members with which to work. So, they constantly prioritize and make trade-offs to focus on the right things at the right time.

Ineffective data management: data is the lifeblood of decision-making for product managers. If data is not currently being collected or referenced for decision-making, then a product manager can assist with getting this initiative started.

Inefficient business processes: internal product management improves business processes by providing the right tools and aligning with business departments to understand their requirements. It’s an important difference between this and the traditional project-focused approach to internal products which was often inefficient and ineffective. Deploying product management allows teams to have a more iterative approach with the business users, focusing on value instead of features and aligned to business outcomes.

Digital transformation in FS has accelerated sharply since 2020 – it’s not advisable, it’s essential. Can banks achieve digital transformation without a product manager? They can, but it will be far easier to adapt to digital with one in place.