New breed of execs can bring true digital innovation to banking
John Rockliffe, Hyland: to get the most out of the IT investment get the whole organisation on board
Digital technology is increasingly seen as the key to transforming banking into a customer-focused industry befitting the modern age, and a new role of chief digital officer (CDO) has evolved to help implement this change.
However, although many banks have used IT to build more customer-friendly interfaces on apps and websites, there is scope to further accelerate true innovation.
While executives finally appear to understand the importance of digital technology and want their banks to lead the way into more efficient working practices and new ways of serving their clients, there is often a gulf between the vision at board level and its implementation in practice. For example, many banks have adopted paperless document technology, which is popular with customers while also improving efficiency.
Yet more meaningful change is difficult to effect and, all too often, major investments in software or IT infrastructure fall far short of their potential because workers across an organisation hold on to their old ways of doing things.
Some IT projects also suffer from a lack of vision and imagination, meaning that they simply digitise current work systems and strategies. Such investment produces a return in terms of efficiency, but does not scratch the surface of what technology can help a bank do in reaching new markets, finding new ways of working and making much-welcomed further savings.
To get the most out of the IT investment it is crucial to get the whole organisation on board. It may also be necessary to bring in individuals with suitable cross-sector expertise to find the best ways to tap into and exploit the digital revolution. In response, many firms across all industries are turning to a new breed of entrepreneurial executive, the chief digital officer.
The number of CDOs across UK firms doubled between 2013 and 2014, and then doubled again between 2014 and 2015.
The role of these new “transformers in chief” goes beyond that of the chief information or IT officer – concerned with providing for the technological needs of the company as it stands. The CDO’s job is not only the purchasing of software, but ensuring those platforms are used in an optimal way; not just providing more efficient ways to do a firm’s current work, but harnessing technology as a strategic enabler for true innovation and new ways of performing tasks.
CDOs are also at the centre of shaking out bad practices by using systems to analyse and improve workflow processes. This can often be achieved through the use of enterprise content management (ECM) solutions built from a single enterprise information platform to cater for all of a bank’s digital needs. Initially implemented to digitise paper-based processes, and with the benefit of bringing a variety of content formats onto a single system, these platforms are capable of much more, and the way they are being adopted highlights the difference between transformation and innovation.
These two words for change – “transformation” and “innovation” – are often overused and yet seldom fully understood. Both terms present opportunity, but there is a difference.
Businesses seek transformation often as a result of, or to react to, a realisation. This may be a realisation of cost, that the organisation is not serving its customers as they might expect, or the realisation that a firm is no longer able to compete.
Organisations that seek innovation, on the other hand, are looking to lead and proactively evolve. These businesses want to be first; they want to introduce new ideas or products to the marketplace.
Many CDOs have steered their organisations to use enterprise information platforms, but examples of such solutions being used to drive real innovation remain rare.
Within the banking industry, ECM solutions are helping legacy banks to match their “challenger” peers by offering a multi-platform way of banking for their customers, allowing them to reach the emerging millennial market while still keeping their older clients on board – but most of that is mere transformation.
Because today’s ECM solutions are easy to deploy and provide complete content and information management functionality, at the centre of an enterprise architecture, they can provide significant elements of business process management, workflow engines and dynamic case management functionality.
Moreover, the best ECM solutions provide this functionality with easy-to-use point-and-click configuration tools designed for the business to self-configure. As such, these platforms provide the toolset for change which true innovators – and CDOs in particular – can use to engineer their own paths to change.
The advent of challenger banks has raised the bar across the industry for the use of digital technology to reach customers efficiently. All banks must, at the very least, match this level to ensure their long term survival. In investment banking circles, IT has also been transforming the industry forcing even reluctant laggards to invest in digital to stay in the pack.
But both technology and consumer habits will continue to change, and there is considerable scope for innovation for those who can develop a vision, followed by an effective implementation strategy. Neither of these propositions is easy, but the rewards in terms of market leading positions are huge for those that can.
By John Rockliffe, enterprise content management specialist at Hyland
