Digital Transformation Challenges in Banking and How to Overcome them

By Jason Rowles, Regional Sales Manager UK & Ireland at PFU (EMEA) Limited

All businesses, including banks, must evolve to remain competitive or be left behind by rapidly changing macro events. But to achieve maximum return, transforming digitally must be strategic and intelligent. Some of the best opportunities for change – resulting in discovering new and better ways to do business – come through enhancing the intelligence of an organisation. When information can be accessed easily, activity is streamlined and expedited, decision-making and strategic planning is transformed, and new business models can be developed which deliver that competitive edge.

Triggers and Barriers

Recent events have seen the world change beyond recognition, accelerating the need for businesses to become flexible, agile and scalable so that they can smoothly redeploy their workforce if required, regroup and emerge into a new environment best positioned for growth. This level of capability is one of the major drivers behind digital transformation projects amongst organisations of all sizes, but all too often poor processes, inefficient workflows, and information management issues stand in the way.

Even without a global pandemic to highlight the need for flexible digital processes, in business there are always improved productivity, long-term cost effectiveness, and profitability gains that will drive the need for digital transformation. So, what are the triggers that start everything off and what are the challenges that hold back those wanting to change?

For most organisations there is a mix of internal and external factors at play. According to a recent research, the top six triggers are all internal factors: the need to improve staff efficiency/productivity; long term cost effectiveness; the desire to increase sales and profitability; the need to process more data; wanting to exploit big data, AI and advanced analytics, and finally to gain immediate access to information. External triggers, such as customer expectations and wanting to be adaptive to younger generations, came much lower down the list.

Most often, it is internal operational issues that hold a business back. The same research found that lack of internal skills and resources, perceived short term disruptions and the challenge of rolling out solutions in a large organisation, as well as understanding what you want to achieve, all featured on the list of barriers to digital transformation.

These are some of the typical digital transformation challenges that organisations face and banks and financial institutions are no exception. Cybersecurity is understandably top of their list with hackers constantly trying to get through defences. Many retail banks still operate legacy systems in part to support their customers in branch but also because they’re long-established institutions with many different solutions in place, which makes them particularly hard to transform. This in itself makes wider digital transformation challenging for banks, but they should still strive to avoid letting legacy systems dictate how workflows are developed and implemented, or adjusting processes just to fit them. This is especially true when it comes to using information mined from data to gain valuable insights into how processes can be made more productive and how-to better tailor services to customers’ needs. Organisational intelligence can play a powerful role in indicating the capability of a bank or organisation to derive maximum value from its information. An intelligent organisation uses data-driven insight strategically to enable it to successfully adapt to its environment or marketplace.

How to plot your digital transformation journey

Like any journey, you must know your end goal and keep it in sight. A good strategy is not to make your immediate goals too hard-to-reach. Take a staged approach instead – which means that each short-term milestone should be achieved while keeping the ultimate goal in mind, therefore laying solid foundations for future stages.

Scanning and information capture is a logical first step of the digital transformation journey, as done well, it provides a solid base that will allow for the future use of more advanced technology including analytical solutions. Operational-level projects are a manageable way to add momentum to the overall digital transformation journey, as they can help to deliver fast results and support the ongoing pursuit of more strategic goals. Furthermore, a reduction of paper processes helps make business process leaner, reduces costs and creates a more productive workforce. All-in-all, scanning and information capture enables a faster, more flexible movement of data – a necessity for improved organisational intelligence and an astute first step in plotting a successful digital transformation journey.