Successful Digital Strategies Focus on Revenue Growth, Not Cost Cutting
Everybody knows that Digital change is sweeping the world at an increasing rate. Around the world consumers have access to new technologies as emerging markets join in on the race to research and implement new advancements. But what does this mean for the Financial Services organisations that serve those customers? Having a transformational Digital Strategy is increasingly critical for those who want to survive and thrive.
To succeed, a digital strategy should be focused on increasing revenue by better serving customers. It must be clear on the tools and processes planned to implement it successfully for the long term. If businesses intend to utilise digital technology merely as a cost cutting measure or believe that a simple waterfall approach to project delivery is sufficient to match the rate of change in technology, they will find it difficult to compete on today’s world stage.
Fortunately, to aid companies in successfully delivering their digital strategy, there are many lessons to be learned from previous implementations, ensuring they avoid the same pitfalls on their quest to deliver value for their shareholders and customers.
One of the first steps on this journey is really understanding what ‘Digital’ is and more precisely what it means for their business. In its broadest sense, digital is any technology that connects people and machines with each other or with information. Being digital in Financial Services, relates to having business processes which are online, automated, and require little or no human intervention.
A digital business should have the following characteristics:
Real Time:Digital systems should be expected to receive and respond to requests and queries 24/7, returning the latest data on demand.
Customer Focused: To be digital organisations must deliver what the customer wants / needs. The customer must be at the centre of all that they do.
Intelligent: Digital services should be able to anticipate customer’s next steps, to prepare and suggest.
Online & Automated: Digital systems should be accessible anywhere on any device without limiting usage and should not require the need for manual intervention.
A Digital Strategy built around these four concepts; Real Time, Customer Focus, Intelligence and Automation, is not centred on the technology itself, but on the core business models which must be created to serve the new digital consumer.
Customer needs are not static however, with new technologies being developed and rolled out globally at an ever-increasing rate, largely due to increased competition. Where previously Big Banks were competing only with each other for market share, long established business models are now being disrupted by start-ups including FinTechs.
As if the increased pace of change and heightened competition weren’t challenging enough, every pound assigned by banks to projects is under increasing levels of scrutiny as saving money remains a crucial focus at all levels of these organizations from team to board level.
Most organizations must therefore be selective with which digital projects are progressed because poor execution will likely be just as fatal to a company’s future as having no strategy at all.
One global bank created a Digital Strategy with a strong focus on innovation and front-end engineering. The key focus areas were the deliberate result of a long-term strategy that had been developed, iterated and enhanced over many years. It focused on the following areas:
These three key focus areas: Customer Targeting through Big Data & Analytics, working hand in hand with IT and Developing Digital Talent, highlight the expansive nature of a truly transformative Digital Strategy. The costs associated with bringing IT resources back in-house, hiring the best talent and acquiring technology start-ups are significant and require steadfast executive support. Additional capital deployed in the right areas can drive profit growth far beyond that which could be achieved by cutting back on digital transformation projects to reduce capital expenditure.
Rolling out new applications and tools as well as integrating those from acquired businesses, is typically most successful when done through an Agile approach. Since Agile methodologies are not appropriate in every situation, businesses usually look to pilot using Agile on a smaller scale to gauge how effective it will be within their organisation, before using the learnings and (hopefully) excitement created, to extend the roll-out and create a snowball effect.
If a large organization is really looking to embed Agile methodologies in everything they do, then the long-term goal should be to move to a Scaled Agile Framework approach. This essentially aligns the entire organisation with Agile processes at each layer; from the portfolio level all the way down to the Agile team (or scrum) level.
Regardless of which approach is followed, you can expect to see the following key features of an Agile approach, critical for delivery of Digital Transformation projects:
- Project delivery is broken down into small iterations with specific requirements/goals, with retrospectives at the end of each iteration aid continuous improvement.
- Short development cycles allow for fast feedback to deliver viable, iterative products (and thus value) as early possible.
- Highest risks managed at project start, with increased opportunity for reducing risk at subsequent stages (contrary to a traditional waterfall approach).
- Flexibility to quickly adapt to changing environments.
In a fast paced and ever-shifting environment, successfully delivering a Digital Strategy is a combination of focusing on the customer, thinking long term, and implementing it effectively. It is critical to understand what digital means for the business, ensuring the digital strategy is focused on delivering what customers want now, and anticipating what they’ll want in the future. Taking an agile approach to delivering Digital Transformation projects can provide the best chance of success, allowing leaders to respond effectively to rapid change and deliver value as early and often as possible.
Mark Primett, William Richardson and Afnaan Iqbal are PMP, SAFe SA and Scrum certified Consultants working with financial services clients in our Pcubed London office, with experience across multiple industries including FS, Manufacturing and Telecoms.
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