Incumbency doesn’t have to be a roadblock says Shaun McKenna, Head of Sales for DST, one of Australia’s leading digital enablers. By focusing on six emerging transformation trends, financial services companies can set themselves for success in 2017… and beyond.
The winds of change have never been so strong in Australia’s financial services sector.
Market dynamics are changing, with economic uncertainty, competition, burgeoning fintechs and increasing market consolidation. Customer demands are rapidly evolving as technology empowers consumers with real-time information and convenient new ways to communicate and transact. Government and regulatory changes are flowing through every sector of the finance industry. And there’s the constant pressure for greater productivity.
The traditional view is that financial services incumbents are disadvantaged at this time of rapid change. But it doesn’t have to be this way. A resolute response to six key transformation trends can shift the balance.
In some respects, the word ‘transformation’ is the enemy of a successful digital future. It implies finite projects when the reality is very different. Rapid change is here for good and assessing whether our systems can do today’s job isn’t enough anymore. We need to think about long-term scalability as well. How easily can we configure for new processes and regulations? How malleable is our customer experience and product development? Can we upgrade our ecosystem without disrupting our operations and customer experience? Building a platform that embraces evolution places us in a stronger position over the long term.
There was a time when digital transformation was seen as a competitive edge, but those days have gone. It’s now a matter of survival: financial services companies without a strong digital strategy will become an endangered species. There’s a growing army of fintechs rewriting the rules in every financial sector. And digitally-driven M&A is on the rise. Companies that haven’t taken the digital step will find it increasingly difficult to compete. Meanwhile, those that have will find they can unlock enticing synergies by acquiring less progressive competitors and on-boarding their customers.
Traditionally transformation starts with the back office. Systems are selected based on their back office capabilities while the all-important engagement layer is reduced to a bundled module. This results in ‘big bang’ transformations that are customer-unfriendly, expensive, slow, risky and disruptive. But a new ‘front end first’ approach is emerging. This involves an engagement layer that is both sophisticated (with extensive content management, customer journey, product and targeting capabilities) and independent: it can integrate with multiple back office systems at once. Front end first companies can deliver a more responsive and stable customer experience, while creating opportunities to evolve the back office at their pace.
We now have the ability to collect an astonishing amount of customer data. We have the tools to involve our people in strategy and process planning. And the market signals are clear for all. What will define future success is not our ability to listen, but to hear… and act. To understand and respond to our customers better than our competitors. And to equip our people to co-create and manage our vision, KPIs and operations. Ultimately, success will be about what we do with our knowledge, not how much we have.
If there’s one factor that, more than anything, will define our success, it’s speed. Speed to market. Fast transactions. Rapid responses to market conditions, competitors, regulations and customer needs. Streamlined operations. And, of course, the ability to scale our technologies on the fly. It’s not enough to actively transform anymore. The winners will be aggressive in everything they do: from their vision and targets to their decisions to their systems to their relentless pursuit of customer and operational excellence.
There’s growing talk about the platform economy: where organisations are defined by their platforms. While platforms are clearly critical, real success will come from an appreciation that people, not platforms, define companies… just as they always have. It’s your people who choose the platforms, manage them and deliver the customer experience, products, processes and results. A platform focus will create companies with enormous potential but little to show for it. On the flip-side, companies who see their platforms as a way to empower their people will set themselves for success.
Your browser does not support iframes.