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There Is No Digital Banking Without a Great Cultural Change

Posted by Anna Mielczarek on 25-Sep-2018 07:30:00

Finally, it seems that banks might have woken up and realised that they need to innovate and transform their businesses, but most of them are neglecting one essential factor – culture.

Most often, factors such as lack of talent or lack of funding, poor infrastructure, and even lack of data are mentioned as being the main barriers to effective implementation of Digital Transformation in banking sector. And, yes – these are the factors that can have an impact on deploying Digital Transformation into your company.

But, not many realise that in order to become a truly digital organisation, all businesses within financial sector must address 3 key cultural issues. These are: risk aversion, lack of customer centricity, and siloed mind-sets as stated in McKinsey & Company report. And these three cultural barriers surpass all others and should become the highest priority for any bank planning to go digital.

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                    source: Albawaba
 

So, let’s have a closer look at each of them.

 

1. A Fear of Taking Risk

For many, encouraging experimentation, not punishing the failure, and accepting the risk are almost the same, and as a result require the same effort. But let’s get one thing straight – accepting the risk is much more difficult and goes much deeper than simple experimentation or acceptance of failure.

But, all these concepts are still foreign to many banking executives. Moreover, great majority of banking leaders have always had a desire to be in a lower risk environment, and risk aversion has always been rewarded by capital markets so it comes as no surprise that making a change in culture is even more difficult than ever.  

‘One of the biggest risks [to digital success] is not taking risks. Companies standing still are the ones that lose the most from digital disruption.’ (McKinsey)

 

And, it is fundamental to mention that the importance of top leadership commitment plays essential role in risk-taking approach. While outside hires and start-up partnerships can be helpful,  it is up to top management to empower frontline employees to make decisions based on new insights that accept small-scale risks.

 ‘The critical question for executives concerned with their organisation’s risk appetite is whether they are trusting their employees, at all levels, to make big enough bets without subjecting them to red tape.’ (McKinsey)

 

 

2. The Difficulty of Making A Customer A Priority 

Despite the fact that financial institutions have been, and still are declaring their intentions of improving the customer experience, and making it their top goal, most banks are falling further behind in this objective, especially when customers in the digital age are more demanding than ever.

And while technology development is providing organisations with solutions, which would allow them to personalise customer experience, customers increasingly expect companies to respond swiftly to inquiries, to customise products and services seamlessly, as well as to provide easy access to the information they need, when they need it.

So, having a customer-centric culture in your organisation is more than a good thing, and competitive advantage. It is a matter of survival. And there’s a good side to it too. Getting closer to your customers will help you reduce risk of experimentation, and support fast-paced change. But how exactly can you do it? Well, rather than guessing what is working and what is not in a particular product or service before launching it, businesses are now able to make adjustments almost real-time as end users can have direct input into development of new product or service features.   

‘The process not only helps de-risk product development, it tightens the relationship between companies and their customers, often providing valuable proprietary data and insights about how customers think about and use the products or services being created.’ (McKinsey)

 

 

3. The Presence of Functional and Departmental Silos

When discussed in banking context, silos are often mentioned in terms of organisational chart. Unfortunately, this view is far too simplistic, even though it illustrates the division of responsibilities within financial institution. However, a much greater dynamic lies beneath the surface, and the inability to share insights about customers across different information silos makes the effective and seamless process of Digital Transformation nearly impossible.  

This is why organisations in financial sector must realise that, in a digital world, the power lies with these banks, which are able to work cross-functionally, and drive customer centricity into the everyday operations of the business.

‘The narrow, parochial mentality of workers who hesitate to share information or collaborate across functions and departments can be corrosive to organisational culture.’ (McKinsey)

 

 

 

About Us: 

B60 is a global leader in delivering Digital Transformation and Technology Development and works with ambitious firms in the U.K. Europe and USA across multiple sectors. Since 2012 B60 has been embracing digital change by utilising our unique operating models, frameworks and methodologies to truly drive innovation and change from within our clients businesses.

If you’d like to discuss with one of our experts on how you could successfully deploy Digital Transformation and Technology Development in your business drop us an email at hello@b60apps.co.uk or alternatively call us on 0121 405 0270.

 

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Topics: Digital Transformation, Corporate Culture, Finance, Change and Innovation