Worth a pretty penny: Key steps for a successful digital transformation strategy in finservs
By Tony Simmonds, Head of Business Transformation at Kocho
The financial sector has had to deal with a series of major changes over the past few years. The industry has been required to accelerate its digitalisation plans in order to work through the pandemic, while it’s also facing the Great Resignation, rapid FinTech expansion, supply chain issues, and a crypto crush.
Committing to digital is a prevalent trend, and leveraging technology is seen as the number one priority to overcome many challenges, whether that’s to deal with staff shortages by using automation, to deliver more innovative services to customers, or by making efficiency gains across the whole supply chain. However, implementing a digital transformation programme is a huge and expensive undertakings that requires the buy-in of many different stakeholders. There’s no margin for error. A recent study by McKinsey shows that over two thirds of all digital transformation projects end in failure. Having a holistic digital transformation strategy, which also includes robust cyber security measures, will place any finserv organisation in a position to succeed.
Key points of a successful digital transformation strategy
A good starting point for a financial organisation of any size is to ensure that the areas of development are well-known and defined. Also, depending on the size of an organisation, the transformation project can be broken down, for example by department, to keep it more agile and actionable.
At this stage holding one-to-one meetings to discover user requirements is recommended, which will in turn also provide an understanding of the tech requirements. For a digital transformation strategy to work, it is important not just to understand but to pre-empt user needs. Additionally, a holistic strategy will also take into consideration if the digital transformation programme will change any customer touch points and how the system will work once it has been completed.
Security is another important point that should be at the top of the strategy agenda, particularly as 70% of UK financial services companies suffered cyberattacks in 2020. A breach can have a major impact on a financial organisation not just by putting sensitive data at risk of exposure or loss, or because it might affect vital systems, but also because it undermines customer’s trust and might damage reputation permanently.
Embarking on a digital transformation journey offers an excellent opportunity to overhaul the cyber security approach and future-proof the business. Often, integrating cyber security at an architectural level will not only prove to be most effective in the long run, but also pays off when it comes to scaling up business operations. Whether the digital transformation project is overseen by an in-house team or is outsourced, innovating the cyber security measures as an integral part of the project will significantly decrease the risk of attack.
The next steps to consider should focus on users and processes, and it’s best to start with building an awareness of the upcoming changes among the employees and the leadership. Having all internal stakeholders throughout the organisation onboard and excited about the rollout of the programme will create momentum and decrease resistance to change. Additional steps to accelerate adoption would be to process-map the changes and to collect use-cases, smooth out any tight spots and ensure that the changes won’t create more friction than benefits. Furthermore, developing a timeline to provide an overview of when the different stages will be implemented and when the project will be completed overall, will also keep everyone accountable.
Adopting these will ensure that the project can deliver the actual change that an organisation is after.
Ways to avoid project plateau during the transformation journey
Digital transformation does take a while; for many larger financial organisations it can take several years to complete the process. Therefore, having strategies in place to constantly drive its progress forward will drain less resources and benefit the business overall.
Splitting the project into three main stages is proven to be the most successful approach to avoid the dreadful plateau:
Prepare: The project sponsor and key team members define KPIs and success measures, which will also be tracked throughout the journey. At this stage it’s key for the organisation to be sure of what they are out to achieve, what resistance they are likely to face and what resources and change strategy will be required to achieve the ultimate goal. Also, they need to decide how long after the project has gone live, they still need to track its progress to determine if it was successful.
Manage: As well as delivering a robust change management strategy, it is equally as crucial for the digital transformation project to receive the priority it deserves, and to be visible and accepted among employees, to assign a sponsor who’s aware of their responsibility and is visible and proactive. The sponsor can engage in a variety of activities throughout the transformation journey from initiating the pilot phase, resolving queries and overseeing the timeline.
Sustain: This final stage can extend far beyond measuring success and determining whether KPIs have been met. Organisations have the opportunity to engage with its teams and manage resistance as it’s all too easy to slip back to old habits once the implementation is visibly over. Continue to monitor behaviours, collect and analyse feedback, and get into the nitty-gritty details of why certain processes might create friction – these are the steps that will ensure the value in change and return of investment long after the digital transformation project has been completed.
How to decrease resistance among employees and ensure that the new ways of working are accepted
Despite best efforts, many digital transformation projects will be unsuccessful. While there are a variety of reasons why this might happen, resistance to adopting new ways of working is one of the main hurdles, and can manifest after the digital transformation project has been completed.
Employees can easily slip back into the ‘old way of doing things.’ Therefore, next to continual engagement with employees through feedback, a successful digital transformation project will also consider the role of frontline managers and how they can lead-by-example. These are the key employees who will be onboarding, coaching and mentoring their teams way past the completion of the digital transformation project. It will fall into their responsibility to fix any issues that might arise during or after the project is complete. Managers need to be notified early, and their support will be as important as engaging a digital transformation sponsor.
As with any digital transformation journey, businesses can only achieve success when everyone is onboard to implement change. Framing the project with well-defined goals and a realistic timeline is vital. Use the process as an opportunity to introduce the latest cyber security innovations, and prioritise employee engagement so that everyone within the organisation is bought into the process and understands the end goal. This formula provides the platform for finservs to fundamentally change their operations for the better, finding new way of delivering value to customers and driving efficiency gains.
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