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How to spot a fake Digital Bank

I just heard a presentation from a leading American bank on the need to be digital.  This bank claims to be a digital leader in the US and, from all the PR and headlines, you would believe they were.  Listening to their presentation, you might believe it too:

  • Our CEO leads the digital charge
  • Digital is not an add-on
  • Digital is end-to-end
  • Being digital is crucial to our future

Yada, yada, yada.

The presenter then put a slide on screen that blew the whole credibility of his presentation (for me). 

This slide said that to be digital required a new organisational structure that is cross-functional, agile and able to operate in an omni-channel structure.

First, you don’t need a cross-functional organisation in a truly digital bank and, second, you never mention channel or omni-channel in a digital bank.

My thinking on this is that I’m calling for all banks in my digital bank presentation to firstly create a new digital business model, that moves away from the old physical structures to truly digital structures.  That business model operates as a value systems integrator, taking best of breed apps, APIs and cloud services and rebuilding them into incredible user experiences and capabilities for their targeted communities (digital banks talk about targeting communities, not customers).

A criticality to being able to be agile in a digital structure of value systems integration however, is to be digital at the core, as I’ve blogged often.  This is where the first piece of credibility of many digital banks falls down. They’re not digital at their core.  Their core is still stuck in legacy and heritage.  Hence why they talk about omnichannel.  There are no channels in digital banks because digital banks think of form factors accessing their digital core.  A form factor is a mobile or tablet; but equally can be a fridge or car; a call centre operator or a branch representative; or a customer walking payments on the net.  Any form of access to the digital core becomes a consistent experience, because there is ONE core.  When there is not one core, the bank has channels.  If the bank has channels, they are not digital because the channels create cracks and inconsistencies as you move from one to another.  At the back end are likely to be multiple systems that are purely integrated at the front-end through the lipstick on the pig.

Therefore, unfortunately for this so-called digital bank, the first failure is talking about channels or omnichannel.

The second is the use of the phrase cross-functional.  Cross-functional means that the bank not only has silo systems that need channels, but silo structures that need integration.  Silo structures based upon products and non-integrated interests of silo product leaders. 

A cross-functional approach implies matrix management; different interests; competitive internal structures; skewed rewards mechanisms; and all the other things that are issues of the legacy past.  A customer or, preferably, user- centric approach is what you expect to hear from a digital bank.  A digital bank organises around user-centricity through a digital outreach to their communities of interest.

This is why digital banks focus upon the customer- / user- experience as their priority.  This gets into another interesting discussion, in that most banks focus upon the experience through some internal team that reviews the bank’s internet Content Management System (CMS).  Wrong.  User experience is end-to-end.  In fact, it builds on my blog the other day about the Cap Gemini survey  discovering all these banks investing heavily for front-end experience, but doing nothing for the user-experience in their prioritisation of projects in the middle- or back- office.  That just does not cut the mustard and is like a general asking for more troops in the face of tanks attacking.  The bodies are there, but they’ll just get run over.

In summary and in future, I’m going to judge digital banks as those that are doing it (user-centric with digital at the core) and will name check those that are just talking about it (cross-functional omnichannel banks).


About Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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