Ever since I started working in business process re-engineering and transformation a while ago, before most millennials were born I should say, I learnt a lesson early on. Transformation will never work without a crisis point.
You cannot make the whole company change if profits are good, objectives are being met, customers are happy, and bonuses are fat. There must be some compelling threat, a burning platform, to make the change.
In many cases, this is the near-death of the company (think Apple in the 1990s before Steve Jobs came back). For some banks, this has been the case in recent times due to the global financial crisis. However, I don’t think many banks have really achieved digital transformation, because their burning platform wasn’t the technology but the operations. The products, services, culture of the banks were viewed as rotten to the core as crisis after crisis hit. First, there was the meltdown, then there were the accusations, then there were the fines, then there were the court cases and so on. This stuff still rolls along, but I’ve seen more banks radically restructure and refocus their products and services and geographies, but I’ve seen very few who have radically transformed their technology stack for digital transformation.
But there are a few. A few visionary banks embarked on these changes even before the global financial crisis, but they were spurred on by it. They specifically saw early on that technology could be a game changer when cloud and analytics and APIs appeared on the horizon. They were specifically spurred into action when investors started piling billions of dollars into start-ups to exploit cloud, analytics and APIs to attack the incumbent banks.
Jamie Dimon heralded the call for change with Silicon Valley is coming to eat our lunch, and many banks around that time five years ago began talking digital. But that’s what many were doing: talking. They weren’t doing digital.
As I’ve been talking in the last week about digital transformation, doing digital is making the core of the bank digital. It’s not just adding it as a channel.
I found it interesting for example in talking with DBS in Singapore and the head of consumer banking said there was a moment when everyone knew they had to change. I asked what it was, and the answer was that the company had decided to launch a brand new stand-alone digital bank in India.
This was a bold move, but it also signalled to all the management that digital banking had to be taken seriously. It wasn’t just over there in India, but it was a big bet by the bank on digital being the future and it forced everyone to wake up and think hey, if I don’t get into digital banking then I might not have a future in this bank.
For others, it’s a call to the grass roots of the bank and customer focus. When the crisis hit a decade ago, I’ve encountered many European banks who said it was a chance to reboot the bank. Some took that chance. Some had too many fires to put out first and have only just got around to doing it.
I think it’s intriguing looking at the difference in different banks attitudes to digital and change. And yes, I know that change is hard and getting everyone to understand it is tough, but if you don’t put a rocket up the backside of every member of the firm – a burning platform – then you will never transform the firm. You’ll just get more of the same delivered maybe a little bit faster and a little bit cheaper.
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...