There was talk about it a few years back but in the moment the magnitude of it didn’t sink in for me, last year it hit home.
I was attending the 2015 Gartner Symposium and chose to take in Ken McGee’s presentation on “How Digital Drives a New Approach to Business Strategy”. In setting the stage for what he was to present, Ken reminded the audience that as of the year 2002 more information was available online, in digital form, than on paper, in analog form. And thus the term “digital transformation”.
In my early years I didn’t have ready access to a computer, my primary school had a couple, but once I entered high school they were freely available. Maybe that is why I didn’t initially appreciate the pivotal event. Having grown up with computers I didn’t contextualize the fact that it only took about 60 years for the digital world to catch up to thousands of years of analog record keeping. The first computer, the ENIAC, was built in 1943.
Businesses began their transition to computing shortly after that first computer was built, one could argue this was truly the beginning of the digital transformation. To stay ahead of the competition companies have since gone through several replacement cycles. For customer relationship management (CRM) software, it is estimated that the replacement cycle is 8 to 10 years.
The financial services industry has been particularly aggressive in its adoption of technology, spending 7.5% of revenue on technology, the most of any industry, with 30% of their budget allocated to new projects. @Chris_Skinner, one of the most influential people in banking, is quick to offer up reasons why they should continue to do so.
The financial services industry was among the first industries to deploy CRM. Historically is has been used to help firms sell to and service their customers, promote loyalty and gain a greater share of wallet. All of those reasons remain true today but the next generation of CRM extends the focus to the customer experience. Customers want more self-service, an ability to manage their interactions with their bank and increasingly individualized engagement.
For banks that means extending the focus from providing staff with better tools to do their job to providing customers the ability to perform their own tasks directly. That means further automation of processes, such as onboarding, that have traditionally been manual.
It also means, however, that there is a greater urgency to create an enterprise wide view of the customer. It is one thing for a firm to only have a departmental understanding of a customer when that customer can’t really see it, even if they do experience that departmental view when the teller at the retail bank doesn’t recognize them as a customer that also has a securities account, it is quite another when a customer is online self-managing their accounts.
To achieve this, a customer data management strategy that not only presents a unified customer record that includes a common view of profile, interaction and transaction information as well as third party information such as what is shared on social media or what is in the news, is required. Getting there is not an overnight endeavor but as the digital transformation advances, the sooner it is achieved the greater your competitive advantage.
The pace of change is accelerating, people have access to information anytime and anywhere through their mobile devices, tablets, and computers or wherever there is a browser. There are many channels of engagement, online through a web portal or via social media, over the phone, or in person. Are your customers always presented the same information? Are they able to make changes on their own that are then reflected across the organization? These are just a couple examples of the impact of digital transformation. Is your firm leading or lagging?
I welcome a discussion on digital transformation in financial services, please add your comment below.