Francisco
González, chairman and CEO of Spanish banking group BBVA states that 50% banks
in the world could disappear by ignoring digital transformations and that BBVA
will be a software company not a bank anymore by 2020, he points out the
disastrously antiquated systems incl. IT systems, "spaghetti" systems
totally unable to cope with the deep transformational impacts of digital on
banking ecosystem & inability to see competition coming from digital
players.
While
European clients made contacts with their bank using mobile which is 11 time
over that of the internet, in Latin America mobile has overtaken as an
interface with bank overtaking all channels being put together. The world is
increasingly moving towards a digital path. With over five billion mobile phone
users, and data-traffic from mobile growing at an amazing rate of 26 per cent
year-on-year, we are at the inflection point of digital adoption. This tectonic
shift in consumer behavior demands businesses to increasingly focus on tapping
the potential of this market. Unheard were thing like IoT (Internet of Things)
which today help us to re-imagine a business through Digital. . Every
enterprise wants to strike the next big idea and spend enormous amount of
intellectual capital in ideating the next disruption and antidotes for the
current disruption. The prophecy of Francisco
González at least has got a strong trend towards it
Future-oriented
business transformation requires an experience-driven process that moves beyond
categories to deliver a meaningful, valuable, and competitive experience to customers. A customer’s best user experience is now
the benchmark for all their business interaction. This is so opposed to traditional
business transformation processes which are driven by off-the-shelf technology.
This leads to an extension of existing organizational silos that separate
product and service. Customers expect an
Uber like experience while dealing with their bank - simple and interactive. As
customer expectations extend beyond categories, successful solutions must move
beyond silos.
The
environment it operates in, the devices on which it works, the winning themes -
they could all be redundant in a longer time-to-market. Enterprises must hence
focus on quick execution of ideas, in stark contrast to how they have traditionally
operated. Digital Transformation moves to a different beat as it is in a space
where forces driving the ecosystem are in a state of constant flux.
Based
on their maturity and commitment banks’ can be classified into three broad
categories;
Digital is a project (project by project basis, Pilots and gradual deployment)
Digital is a business (cross functional team mixing IT, distribution
and marketing ,Test and learn approach with parallel testing and big bang deployment
,Flexible and agile execution with regular review)
Digital is a core value (Pure digital model, pure player model that
accelerates digital transformation, dedicated lean IT)
The
third category being on the offensive seeking business leveraging technology by
employing agile teams with fast time to market with entrepreneurial mindset
backed by web enabled IT teams.
Irrespective
of the above approach the organization needs to be anchored by four dimensions namely;
Client centricity (Agile IT organization and cross functional
teams studying the customer desires leveraging the power of social media and
maintaining live interaction with clients)
Openness to innovations ;Integrating IT and marketing to create an
Agile organization that merges client needs with solution delivery at a fast
pace
Organizational flexibility ;The proliferation of new technology and
faster time to market call for a fundamentally flexible IT platform that is able to integrate
external cloud service .A deep cultural change by integrating the front end and
industrializing the back end .In effect a deep rooted cultural change.
Technology centric approach ;Leading banks are creating a smart middleware
layer that computes and processes customer and business intelligence with state
of art technology and interfaces .Ultimately such middleware will be opened up
to third parties.
Looking ahead:
Most
banks have started the journey which is still in the mid path. Banks have no
time to waste as customer behavior radicalizes on account of technological boom
in terms of IoT, spread of smart phones and 26% yoy increase in internet traffic.
While today 50% of the phones are smart phones, in 2020 it will be 80%.This
makes a strong case for operational agility .Leaders will offer true expertise
from highly skilled professional everywhere as banks build a strong digital
foundation and launch digital value proposition. While branches may be added by
digital players to show case their brand but the overwhelm trend is that of an
app focused front end, a central core connected database hosted on cloud and a
backend which is industrialized and outsourced.
The
inevitable pressure to reengineer the operating models with an end to end
process review taking into account proper allocation of both human and
technological resource .Rest is what time will tell.
