By Sarah Carver, Head of Digital at Delta Capita

Digital transformation has for years been the overarching term to describe a plethora of different activities. Ranging from overhauling legacy tech, reimagining front end customer experiences and automation of existing processes – it’s a term that’s widely used and often misunderstood due to different groups meaning different things by it. Therefore, there’s a need to get down to basics to understand what digital transformation means and specifically agree on what it means within your organisation. Once you’ve ensured everyone is on the same page, it’s critical to ask why we are doing this? Why are we about to embark on what is likely a very challenging undertaking, and what value will it deliver for our business?

The ‘why’ will probably fall into a few different buckets.

• To reduce costs.
• To stay competitive.
• To remove legacy architecture which is a) holding back change or b) causing future regulatory / risk concerns) or c) is too costly.
• To future proof our proposition/tech.
• To make it easier to interact with partners / the fintech ecosystem.
• To improve our customer experience.
• Because competitors are digitally transforming and there is a fear of getting left behind.
• To be seen to be ‘innovative’ or ‘digital.’
• The CEO/ CTO / CDO says so (generally due to a mix of the above)

Once your ‘why’ is understood, your team can develop a roadmap. For example, if cost reduction is the immediate focus, manual process automation may be at the top of the list. If it’s a longer-term strategic focus to position your bank as a digital leader for a specific customer segment, then a different priority set would follow – focusing on customer research and SWOT analysis. The ‘why’ shouldn’t just be an underlying vision statement rolled out at the occasional town hall. It should help define every item in the backlog.

Below we’ve highlighted some of the questions to ask to help you develop a roadmap. We’ve split them into internal – looking inwards into the organisation, and external- looking outwards to customers and the market:

Inside the organisation

• Strategy: Where are you currently competing in the market? Where are you looking to compete? Who else is operating in that market? The banking market has opened up extensively with new entrants and non-traditional players increasingly looking to gain market share. An ‘us too’ vanilla offering isn’t going to win customers. It might retain some for longer but isn’t an effective strategy for long-term growth.
• Architecture: Do you have a robust architecture plan in place? Have you lifted the hood of your legacy stack and are aware of what’s there? Doing so doesn’t have to be a painful and time-consuming exercise as there are now tech solutions to help. However, you’ll need to ensure your back-end reality supports your front-end vision and enables you to work with partners nimbly.
• Agility / Ways of working: This isn’t ‘digital’ but often gets thrown in the same bucket as it’s one of the reasons financial institutions struggle to succeed with digital transformation. Suppose you have an empowered team passionate about a new proposition / new concept, but they have to wait for extended periods to get the rubber stamp. Or the backlog is so extensive you can’t rapidly innovate. In these cases, your transformation efforts are unlikely to deliver. You’ll also probably end up with a skills gap as talent will move elsewhere.
• Cost: Are there unnecessary costs in your business? The answer is almost always yes, and they can usually get broken down into two areas.
• Technology: Inefficient/ costly to maintain legacy architecture or multiple instances of the same system where the knowledge of what does what and how it interlinks has left the bank unnecessarily maintained due to perceived importance.
• Inefficient processes/people (lack of automation). For example, when servicing customers, there are often instances of processes that should be simple for the customer through a few clicks of a button and should be an automated digital self-service journey. On the other end of the spectrum, some processes should be guided and supported and opportunities to differentiate your brand, which will be a missed opportunity for banks.

Outside the organisation

• Brand perception: Whether it’s a coral or metal card, the tone of voice you communicate with customers, the end-to-end sign-up process, or the UX of the app, the overall experience matters more than it ever did.
• Customer experience & communication: This has been propelled to the forefront during the pandemic and listed as a top issue faced by retail banking customers during 2020. A Delta Capita analysis using natural language processing and data analytics on consumer review data of over 58,000 data points, noted that customer service and call centre support were the top topics in negative customer sentiment from customers.
• Regulation: A key consideration in any digital transformation strategy is compliance and regulation. Institutions must comply with a range of regulations and be ready to adapt constantly. Inefficient management of regulatory obligations not only results in fines. It also leads to potential reputational risk and decreased customer trust. How you treat your customer data, communicate product offerings, and ensure your legacy systems, processes, and controls is of the utmost importance.

It’s never too late to ask why. Whether you are mid-way through a digital transformation or just about to start, it’s critical to go through this exercise. Once you’ve worked out the answer, you should embed it into everything you do regardless of your usage of the ‘digital transformation’ term Whether overhauling legacy tech, digitising or automating internal processes, improving the front-end experience, or anything else, succeeding with digital transformation rests on whether the supporting teams are bought into that vision and empowered to succeed both culturally and operationally.