Being a part of a business we all hear about Digital Transformation – how important is it if the business wants to stay ahead of its competitors, what great opportunities and chances it can bring to the company, and how much perceived value it adds to the firm. However, blindly focusing on those benefits and as a result overlooking potential challenges and threats a company will need to face while implementing Digital Transformation can cost the company its chance to succeed in the market.
Even though, financial services have been computerised for many years, more radical digital-oriented transformation was denied as traditional banking seemed to be easier and most importantly - safer option. However, as Digital Transformation has been constantly taking over other industries, it is inevitable for financial institutions to still resist it. The pace of change is getting much faster and if banks want to survive, let alone succeed, they need to adapt to current trends.
When deploying Digital Transformation, companies in financial services industry, just like any other businesses, must be aware of challenges they might face.
So let’s talk about these challenges.
Resistance to Change
When mentioning change, you cannot forget to mention resistance to change as these two factors will always be inter-linked. Essentially, resistance to change may either come from people within the company or the company itself, meaning when trying to implement Digital Transformation, some organisations are likely to struggle with either funding or resourcing new digital projects. Before deciding on Digital Transformation, it is fundamental for a company to have enough resources to change. As a company, which does not bring profits cannot progress - and without progression there will be no success.
Moreover, as mentioned previously, people might opposite change and as a result sabotage the business. Looking at financial services, many banks have been rewarding their staff for face-to-face interactions or sales in the branch. And why is that? Because these can be attributed to an individual employee. By deploying Digital Change where personal contact is somehow reduced, people might not feel as motivated thus, resist change.
Therefore, any organisation, including banks must be clear and completely transparent about the change they plan to implement. Make people aware of it, let them understand it, and most importantly listen to them and they will show you their support. Try to reward overall digital sales as well as team effort and customer satisfaction.
Serving New Types of Customers... But Losing the Old Ones
Most companies are used to targeting customers in a traditional way. Of course, they are also focusing on digital marketing and social media, but they cannot or they do not want to do it while completely abandoning the idea of traditional marketing. And customers feel exactly the same! They want the mix of both.
Digital Transformation can bring company two great challenges. Firstly, it can either focus too much on Digital Customers and as a result it will neglect customers that are not that fond of this kind of approach. It is important to mention that particularly financial sectors must be aware of this issue as many older customer still perceive traditional banking services as less risky.
Secondly, business must consider how difficult it is to meet expectations of customers preferring digital behaviours. Importantly, a company must be constantly innovative, as especially Millennials more than previous generations have great demands when it comes to technology and businesses that are approaching them this way.
As for financial institutions – their traditional organisational structure was focusing more on products and processes rather than relationships with their customers. Banks have collected plethora of data siloes and systems, which can make it even more challenging for them to automate and simplify processes that should result in more consistent and wider customer experience. Also, not knowing and understanding customers’ expectations of their ideal digital experience can significantly lessen the ability to deliver it.
Lack of Strategy
Last but not least, companies which want to implement Digital Transformation must have a strategy. It might seem like there’s no need to mention this issue as every company facing major change will have the right strategy. However, this is not the case and in most situations, this is the reason why companies fail to realise their objective(s).
For financial services, shaping new digital strategy might require them to leave their comfort zone. Top-down, integrated approach focusing on every aspect of the organisation such as distribution models, value propositions and end-to-end consumer-centric journeys is a must!
B60 is a global thought leader in the application of enterprise mobility technologies and has worked with ambitious firms in across multiple sectors since 2012 in developing and adopting mobile strategy and tech. Feel free to get in touch!
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