How The Digital Revolution is Going to Transform Banking in 2015

As the digital revolution transforms the economy, one megabank chairman warned his staff recently, “The industry faces more change in the next 10 years than there has been in the past 200.” So where will those banking changes emerge in 2015? Let’s use the familiar categories of people, process, and technology to discuss the coming unfamiliar.

People – The Empowered Bank Employee

When recent image issues and cost pressures forced banks to compete aggressively for talented employees, they stepped up their recruiting game and compensation plans. Now, what about retention? Not surprisingly, the best employees for the digital economy, who freely use the latest technology in their personal lives, are not content with yesterday’s technology and user support. They expect to be empowered to do their work as their roles require.

One bank CIO confided recently, “We were frankly caught off guard when we surveyed our employees about our latest innovations for them. They were indifferent to what we thought they needed. We realized that we can’t centrally dictate user support levels and technology from on high. We have to respond with much greater flexibility and empowerment.”

This is a guest editorial by Unisys’ Director of Financial Services in Central, Southern & Andean Latin America

Your top salesperson can’t afford to be without her tablet for days while someone in the IT department works to resolve the problem. Your lenders can’t afford to be shut out of key databases when they are in the field. Employees in the digital economy will expect tailored support that matches how they work. In fact, many recent studies on employee engagement show that a mandatory expectation of top talent people is the ability to utilize the same technology in their personal lives and to pursue career ambitions.

Process – Enterprise Social Business

How will banks do all that with people? With a cultural change in the hierarchical structure, silos today are transformed into a social business enterprise. Think social media bent to the needs of vast organizations of talented business people who currently find it difficult not just to collaborate well, but even to know of colleagues’ existence, expertise, breakthroughs, and challenges.

When the digital revolution erases legacy lines and hierarchies, workers will have fresh challenges to assimilate into the organization like identifying internal experts, finding a common collaborative platform, and sharing their expertise. Those things don’t change by directive, cajoling, or evangelizing. But they respond brilliantly to an enterprise social business model that focuses directly on bringing value to individuals and thereby the bank. When employees are empowered to solve problems and collaborate smoothly within their normal work style, the result is better operational efficiency, effectiveness, and an engaged workforce – all keys to banking competitiveness.

A word of caution, however, about the temptation to pick the popular social platform and retrofit it to the bank’s needs. There is no one “best” technology platform. Once your bank has carefully rationalized a strategy and gained full commitment from executive leadership, the technology almost chooses itself. Strategy makes clear which platforms will or won’t work.

Technology – Topped by Business Models

In the digital revolution, technology models take a back seat to business models. That’s it, the key to success, or at least survival, will be to conceive new business models, secure in the knowledge that technology is no longer a constraint. Certainly, the eBays, iTunes, Amazons and other pioneers in the digital revolution are underpinned by impressive technology, but it was their idea to convert physical businesses (auctions, music, bookstores) to digital models that drove their success.

The notable difference, of course, is that the eBays had the advantage of starting fresh, whereas the banking industry has vast and valuable legacy physical assets (customers, branches, currency) to balance in their pursuit of digital business breakthroughs. Imagine that one bank, no matter how brilliantly it rolls out its digital lines, shuts down its call centers. Banks have to keep a focus on their non-digital processes while reinventing their businesses in the digital world.

Often this discussion defaults straight to mobile banking for consumers, and certainly mobile drives a massive transformation from physical to digital. Nevertheless, many banks are actively seeking digital business breakthroughs in Wealth Management, Treasury and Corporate Banking. Moreover, the digital economy will increasingly erase those line-of-business distinctions, as “hybrid” customers seek flexible product bundles.

The business value, sharing information of critical mission, the access to capture and distribution and dissemination within defined policies and procedures, should the drives. However, to activate this transformation and access, this value requires that this includes a comprehensive strategy, culture shift, change management, and a roll-out and adoption plan in sync with the powerful technologies that are within the reach.