A CTO guide to digital transformation in financial services

Information Age and Accedia look at how CTOs can enter the digital transformation race in financial services A CTO guide to digital transformation in financial services image

Why join the race?

Mobile payments and robotic automation in bank offices are no longer considered an innovation. Today’s race for transforming long-established businesses within banking and finance has brought concerns like security in a data-driven world, aging infrastructure vulnerability and demanding regulatory compliance to the centre stage. And although most of these are here to stay, each technology challenge comes with a range of reasons to question the status quo, and introduce solutions that will secure competitive edge.

No matter the driving factor, the more difficult part of the equation remains designing and implementing innovation that solves actual problems and makes strategic sense. It is easy to get carried away by your most pressing agenda and compete for buildup – by procuring fragmentary software “solutions” to different parts of the digital transformation puzzle.

>Read more on Moving beyond digital transformation

Data warehouses, cloud hosting, CRM systems etc., might bring some automation benefits, but it is quite hard to make them all “talk” to each other, especially considering your core business should remain focused on providing the best service, regardless of the technology enablers to it.

The competition is tough, considering the millions of companies investing in disperse innovation initiatives. The entrance of disruptive outsiders to finance, like blockchain payment systems, digital wallets or the entire Big Tech movement is complex.

So, what are the CTO best practices for enabling the necessary sustainable innovation in an enterprise context?

Sustainable innovation should be the target of every organisation looking to compete in the future. Photo by Martin Adams on Unsplash

Sustainable innovation should be the target of every organisation looking to compete in the future. Photo by Martin Adams on Unsplash

Getting ready

The key ingredient to getting ready is the correlation between technology maturity and mid-to-long business goals. Incorporating a cloud-first action plan across an organisation, digitising a core, yet cumbersome business process or introducing machine learning to overcome the boundaries to excellent customer service – there are a few steps to go through:

Mindset

Across the examples and scenarios stated above, one concept persists – the importance of having the right mindset. We are talking about that of an innovation company, no matter whether you are the head of a 200-year old bank or running a small accounting firm.

Success stories range from Philips’s repositioning for adding value to healthcare, Visa’s mission for a cashless world to Bosch’s own innovation company. All these cases involve companies that essentially should be solving everyday consumer problems on a much smaller scale. However, cross-industry interaction means both new business opportunities and a greater potential to scale and contribute to universal challenges ahead of the society.

>Read more on The role of the chief technology officer in digital transformation

Transposing this to terms common for financial services businesses, CTOs need to go out of the borders implied by their role in the organisation and adopt a forward-thinking approach and openness to innovation. This might mean more interaction with stakeholders from various functions like customer service and marketing, more input from the community of regulators, users and suppliers, i.e. looking proactively for alternative sources of inspiration that inherently delivers value.

Market research

Assuming your entire team is set for challenging the way things have been done so far, there comes the homework part, or else said – thorough research. To be exhaustive and effective, there are a few items to include on your list. Enablers like public programmes for financial and consultancy support, or partnerships with organisations along the value chain are the obvious must-checks.

It is crucial to note what others are doing. The term “others” here also denotes those that challenge the definition for a business in finance, as they are the ones which have the capacity to scale and turn the industry head over heels. Facebook’s in-messaging money transfer service, for example, gives a good outlook on how the social media giant is using its biggest strength – enormous day-to-day user base, to take over a service otherwise conventional to finance.

It is not about following their steps. It’s a question of thinking outside the box, i.e. what’s the trump card you can leverage as a base for innovation. Is it excellent customer service, niche portfolio, unbeatable geographical coverage or steadfast credibility? Use it as a trigger for your long-term transformation strategy and build upon it with technology integrations, new services and better processes.

Strategy

A sound strategy to digital transformation should act as guiding frame, instead of a rigid plan that may turn out to pose more limitations.

Let’s say you are a CTO at a bank, whose target is to change the post-sale consultancy part of your business into a process led by machine learning, much like Siri or Alexa, at the disposal of your existing customers. This fits your journey to automation and would save a substantial amount of time, and error-prone decisions for your clients. It might make more sense to go for a customised approach to match best your user journey.

>Read more on Digital strategy to digital transformation

It’s important to evaluate the pros and cons of running this transformation initiative, by engaging your own experts or an external partner. It’s not even a matter of whether you have the right expertise at your fingertips. It’s a question of do you need to dedicate it to a long-term project that might be co-implemented with an ally with deep domain know-how, on top of solving similar technology challenges on a day-to-day basis.

Your particular case might require involving nothing but inherent know-how, yet an informed decision is the best you can make. Whether you are еxploring technology, regulatory or education partnerships, look for the same innovation mindset and experience in bringing transformation strategies to a successful development.

Successful digital transformation is key to the innovation and evolution of traditional companies being disrupted

Successful digital transformation is key to the innovation and evolution of traditional industries, that are being disrupted

Team setup

Once you’ve defined your milestones and outlined the path to achieve them, it’s time to implement. In order to make digital transformation happen, it’s good to set a distinct function within your organisation, e.g. an innovation development department. This formality (at first sight) will keep stakeholders engaged to a much greater extent than if they considered innovation creation as a side project. Those involved should be cross-department teams made up of people with expertise in marketing, sales, technology operations and whichever other functions take a central role in helping your business run daily. This interaction also has the benefit of securing consistency with your brand positioning from every angle point.

>Read more on How to create a stronger bond between IT and HR

Accedia, for example, has implemented this strategy for one of its long-standing clients in finance. The company is working with the disruptive innovation team at one of the largest financial services providers in Africa, responsible solely for creating sustainable sources of competitive advantage. One of the initiatives Accedia shared – identifying revolutionary ways to tackle gaps in engagement via sentiment analysis, demonstrates the commitment to pursue ceaseless excellence in omni-channel customer satisfaction, starting on the inside.

Somewhat in contradiction to the point just made, the formal inclusion of digital transformation within your structure does not necessarily imply its achievement. Forrester makes an interesting statement on that matter, concluding that the presence of a role like the Chief Digital Officer, if not taken on from a CTO or a CIO, rarely embodies the comprehensives of this “function”, and is able to transfer the right message to key decision makers in its own persuasive capacity. Attaching more significance to structuring the right team than associating digital transformation with a single figure is sure to attract advocacy.

Verification

Your clear transformation proof-of-concept is the trigger for you to start looking for validators. А quite legitimate one is a sample of your most loyal customer base. Think of it as an audience that will eventually reap the results of your digital initiatives, even the ones targeting internal process reorganisation. Have them test a simulated environment or a minimum viable product pro bono, and you’ll get the most objective feedback, not to mention the appreciation effect of such involvement.

Taking a step back to designing that same wireframe – do it in consistency with your audience’s surrounding technology landscape. In other words, try to integrate your solution well into the lifestyle of your clients.

Customers can help validate your digital transformation projects. But, leaving them out could mean you end up sitting alone. Photo by Caroline Attwood on Unsplash

Are these corporations characterised by a high-degree of technology stack interconnectedness and need undisrupted service availability? Offer them something which will target their dependencies without adding any more complexity. Or are they retail chains, demanding tailored credit options at a quick decision-making speed? Address their distinct situation with a predictive analytics solution producing the best credit plan based on user data entered. Building a digital environment for clients to thrive in is sure to lead you to a successful pilot.

Towards the finish line

Knowing that it doesn’t stop with the well-accepted launch, will save you a lot of unforeseen worries at a later stage. Here are a few quick tips for leveraging the most of transformation once you have stepped into implementation phase:

 Scalability and customer experience at the forefront: Stay focused on how you can expand and make your stakeholders’ lives easier. Various means for obtaining feedback, like digital surveys or one-on-one talks will take you there.
 Training and onboarding: Make sure everyone involved in using, maintaining or communicating the benefits your innovation is up to speed with its mission so that you can expect real dedication. Team workshops led by early adopters with expressed leadership influence usually work well.
 Formal advisory: If you’ve worked with a partner to help you redefine your organisation, it makes perfect sense to continue relying on their advice for what comes after. Have an idea for a breakthrough functionality or a way to improve a workflow? Validate it with them and take advantage of their accrued industry know-how.

>Read more on Business metamorphosis: Digital transformation of the enterprise

To build the whole picture, digital transformation is more than a buzzword, it’s a lengthy process that requires commitment and maturity to be monetised on.

What this means for a CTO in Finance is responsibilities stretching from new technology readiness – having a clear vision stands higher on the agenda – to move beyond the particularities of technology and transform a conventional organisation for the future. Nourish your leadership, communication and even predictive skills consistently to unlock a sustainable edge in the race for innovation.

Sourced by Yana Doshkova, Marketing Manager at Accedia

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