The director of operations at Skyscanner recently revealed that the company has re-organised its workforce into ‘tribes’ to secure true collaborative working. Each tribe consists of multi-disciplined specialists responsible for individual aspects of a product.
This structure has enabled Skyscanner to accelerate product development and implementation, helping to create a constantly evolving product. Keeping up to date, especially with integrated technologies, is essential in a mobile world.
If digital and technology-enabled companies such as Skyscanner have had to restructure their business in order to maintain its competitive edge, the task ahead for those in the financial services and insurance sectors is even more challenging.
>See also: What is a true digital enterprise?
However, with the exponential rise of the ‘smart’ customer, digital transformation is vital for survival. According to a recently published survey by Bain, 79% of global consumers report that they will use a digital channel for insurance interactions over the next few years.
FSPs need to adapt to suit their customer’s needs or risk having their lunch eaten by challenger and more nimble online competitors.
Barriers for FSPs
FSPs face numerous hurdles in adapting to the online revolution. Given headline-capturing technology failures, these organisations are understandably risk adverse and reluctant to move away from the ‘tried and tested’ ways of working. Many also have the cost and expense of legacy systems that they have invested in over years.
The shifting regulatory landscape also contributes to the reticence to move to digital platforms. New regulations like Solvency II, which comes into force in January 2016, impose additional burdens on insurance organisations attempting a digital transformation.
Notwithstanding these difficulties, more and more FSPs are looking to embrace the game-changing nature that ‘digital’ can offer. Aviva, the UK’s largest general insurer, are one such organisation leading the way with the opening of its ‘Digital Garage’ in the heart of London’s Tech City.
In a move similar to Skyscanner, Aviva plans to use the Digital Garage to bring together specialists from different parts of its business to work on projects focused on increasing its digital functionality and working in more agile ways.
The Digital Garage has created, amongst others, the suitably named ‘Drive App’, which offers discounted rates to safer drivers after monitoring motorists’ behaviour using GPS through their phone. Products like these illustrate the changing interface between FSPs and their customers.
Contracting for agile
Agile working and digital transformation go hand in hand. Agile processes allow the customer and supplier to work flexibly and efficiently without being tied to a pre-determined solution.
Notwithstanding the advantages, contracting for agile creates numerous legal concerns for the more conservative customer. ‘Figure it out as we go’ is not the best sentiment to create a robust contract for an organisation embarking on significant business transformation activity.
FSPs are under strict governance and regulatory compliance requirements – meaning ‘pure agile’ contracting does not work so well for them, largely due to liability and regulatory compliance concerns.
Hence the evolution of a hybrid contracting method called ‘contractualised agile’. This hybrid allows more conservative organisations to still recoup the benefits of leveraging agile methods within a digital world, but to set some parameters at the outset without straight jacketing creativity in the lab.
Business outcomes tend to drive digital transformation projects, so one solution is to contract for these overarching aims while still allowing flexibility on the ground. The best of both worlds?
This approach is not without its own difficulties. The level of specificity, customer dependencies and commercial structure still need to be carefully thought through.
One approach is to try and develop certain generic acceptance criteria upfront (e.g. alignment with digital strategy, IT architecture and security standards, regulatory compliance etc.) with a process for detailed criteria to be agreed sprint by sprint. This can help ensure organisations know what the tangible outcomes will be, without being overly prescriptive at the outset.
If FSPs want to become true digital creatures, they need to transform internal processes, back-end systems and customer interaction and experiences for more complex financial products.
FSPs are naturally non-agile. They are heavily regulated and have numerous stakeholders for starters. Agile requires the organisation to be responsive, flexible and nimble.
Transitioning a start-up culture into an entrenched organisation may help with a ‘grass roots’ approach, but it ultimately needs to lead to a top-down culture change within the organisation.
This neatly leads onto the last key enabler required in digital transformation projects: capability building. FSPs recognise the need to expand their own internal capability for agile working. Less reliance on external specialists and the ability to grow and drive their own digital strategy, with the right digital talent to support this, will be the key to the traditional FSPs survival in the new digitally transformed world.
Sourced from Anthony Day, DLA Piper