Feedback – The Key To Digital Transformation For Big Banks
Big banks are facing two challenges right now – FinTech startups and the digitalisation of customers. The FinTech firms are innovative, customer-led and, most importantly, agile, both in their internal processes and external services. And for the customers, that’s exactly what they are looking for, an agile, adaptive and fully digital financial alternative to the bigger, slower, ‘old-fashioned’ retail banks.
Most retail banks are simply too big and too stuck in their ways to be agile in today’s market. But this can change. And it all starts by looking at the modern day digital customer and how the FinTech firms are ticking all their financial boxes.
FinTech and the Digital Customer
Smaller banks like FinTech startup Mondo, which provides users with a current account, and Atom, the UK’s first digital only bank, seem to be built for success. Thanks to a winning formula of tech and agility, these newcomers can gain market share faster and in a way that’s more disruptive to traditional banks’ models. Grant Thornton predicts that the ‘smartphone revolution’ will change the face of banking. It anticipates that as the tech progresses people will make fewer visits to banks but, thanks to banking applications, transaction volumes will skyrocket. This is all because these FinTech firms adapt around their digital customers and, because of their small size and agile nature, make big decisions quickly.
So how can the big banks keep up? How can they move away from the ‘too big to be agile’ attitude? With only 37% of European banks having an allocated budget “specifically for digital transformation”, it seems like a tricky task.
The first step begins with an internal / organisation-wide change of beliefs.
Put Your Employees First
This year’s World Retail Banking Report gave a great insight into the current state of retail banks. According to the report, whilst 96% of banking executives agree that the industry is evolving toward a digital banking ecosystem, only 12.9% say their core systems can support it. The big banks are well aware of the situation, but with aging technology and even historical internal processes, a solution seems like a distant dream. It can be pretty hard to know where to start making changes.
But the first step doesn’t come from a huge upgrade in tech, it comes from changing organisational beliefs and the habits of every employee in order to innovate from the inside out. One of the most vital elements of a digital transformation is wanting to generate feedback. Not feedback from your customers, but from your employees, who understand the expectations of themselves and the customers. By creating a culture where employees feel able to have their voices heard, you’ll be able to get feedback from every level of the business and be able to make quicker, better decisions because of it.
Smart decision making is at the heart of being agile.
Remember The Value of Decision Making
A big part of becoming more agile is through streamlining the decision making process. If key decisions can be made more quickly, and more people can have their opinions heard in a productive way, big banks would be capable of being more reactive. One way to do this is a very simple one. Have better meetings.
Having better meetings doesn’t just mean everyone being on time, or having the agenda in advance. It means changing how they operate by using technology. It means collecting opinions, questions and feedback (your data) and translating that into solutions. You may not be able to turn to your CEO (or the large number of stakeholders involved in making a decision) next to you and make a decision in a big bank, but technology can help get you get a bit nearer.
This is what a true digital transformation involves. Not just an upgrade of tech, but an internal improvement of ‘the little things’ to make your processes quicker and your key decisions better.
Internal Feedback is the Future
If big banks want to keep consumers (both ‘happy’ and in general) they have to innovate and go online. But to be ready to do this the whole company needs to embrace digital transformation. The benefits of this will be felt (externally) by customers and (internally) by employees who are more connected to the decision making process and a part of a more dynamic business. Internal feedback doesn’t just help employees feel more engaged with the bank as a whole, but it will lead to a better, more efficient decision making process. That’s what the FinTech teams are doing well, and that’s what the big banks can be doing too.
And if that doesn’t convince you, McKinsey predict that “European retail banks that pursue a full digital transformation, pulling all improvement levers, can realize improvements in earnings before interest, taxes, depreciation, and amortization of more than 40 percent over the next five years”.
In today’s fast-paced financial world, it pays to transform, and that all starts with a willingness to generate internal feedback.