Digital transformation is ringing in the ears of the C-suite across the world. For established financial services companies, it seems there is a narrow conception about what this really means and they have a sustainable strategy around digitizing their business.
Financial services is certainly an interesting case study. The recent SAP and CIO Magazine ANZ Digital Transformation Research Report shows that all financial services respondents said they were focused on digital transformation to meet the objectives of outcome-based customer experience and improvements across all channels.
It’s clear that customer experience is a key priority for financial services organizations to effectively meet and exceed the growing expectations of their digitally savvy customer base. Falling behind is not an option.
Are you really connected to your ecosystem?
The question arises: with all the focus on the customer-facing experience, shouldn’t companies also be looking at their core business processes? How are they going to keep up with the demanding operational side of delivering success to all parts of the organization’s ecosystem? Has back-office automation, which is vital to an organization’s continued success, been considered in this digital transformation?
Bala Subramaniam, regional head of Business Transformation Services, SAP Asia Pacific Japan, hits the nail on the head with this observation: “How digital transformation affects the business internally – all the back-office systems and how it connects with other organizations in its ecosystem – is not always on people’s minds when they talk about the subject. It’s not just about providing better customer service. It’s about updating IT platforms, preparing core business functions, building business networks, and tooling up internal workers, too.”
Placing a “digital umbrella” over the whole organization, from back to front, is what will truly bring your digital transformation to life. It comes down to rethinking your business processes and fundamentally changing them to enable agility, simplicity, and innovation throughout your whole internal and external ecosystem. This will provide the basis for growth into new products and services and potentially new business models.
The CIO Australia and SAP research backs up this notion, with over half of the respondents reporting the desire to create a more collaborative business ecosystem for staff, customers, and suppliers that is driven by digital technology.
The risk of failure
Financial services organizations need to approach the digital transformation with an integrated, long-term digital strategy and deliver programs that will transform business processes and potentially business models. The research shows only 13% of all respondents admitted they were working with such a broad outlook.
So what is the outlook for financial services organizations if they do not broaden the digital transformation strategy? To put it lightly, organizations will run out of resources and budget, and will end up with a core that is even more complex. Bala Subramaniam emphasizes this point in the research, and it’s a clear scenario we see around the world, with many companies complaining that cost and complexity is the biggest barrier to agility and success.
The next step
Financial services organizations must look outside the customer experience box and ensure that the business comes together to define how the organization can successfully create the “digital umbrella” across the whole organization.
In summary, ultimately the transformational objective should be to become a data-centric organization. I see this happening in two phases:
Phase 1 – Back-office automation to reduce the cost of running the business and support the potential to innovate into new services and business models
Phase 2 – An open digital ecosystem to be open to partnering with external organizations to provide a complete service to customers and employees; not all capabilities need to be built and provided in-house in the digital economy
To learn more from the SAP and CIO Magazine ANZ Digital Transformation Research Report, click here.