Assessment of Digital Maturity
According to PWC, a consulting firm, “46% of customers skipped bank branches altogether, relying instead on smartphones, tablets, and other online applications” and customers were more satisfied with direct to consumer insurers while asset managers have begun more widely offering automated advice. The trends are clear and financial sector firms must either digitalize to survive lose market share.
Financial institutions have markedly increased their digital investments in recent years, retail banks alone have spent US20 billion in 2017 according to PWC. But it is unclear if these investments have paid off as the obstacles to Digital transformation are varied and many. Changing the customer interface alone is not enough, legacy systems must also change to match the changes in the service models that are needed and most large financial institutions often lack the agility for rapid change. Small startups are better at that but they too lack the scale and staying power needed. As a result synergistic partnerships between the two has become an emerging trend.
The other obstacle is the culture shift that is needed in order for the large financial sector workforce to adapt to the new digital paradigm. The objectives, incentives and performance measurement must also change – otherwise all that investment runs the risk of good money after bad. This could be challenge more formidable than technological change for the financial services industry. Security and regulatory compliance are also impediments to rapid change.
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Digital Transformation in the Financial Services Industry - CASE STUDIES
Today, over 70% of surveyed millennials say they would be happy to pay for banking products and services provided by non-banking companies—for example, telecommunications operators, technology and internet providers, online retailers. And of course customers will increasingly want their bank to offer content carrying higher value-added—products and services that fit their needs more closely.
Some banks are responding by trying to extract value from banking transaction data itself by providing customers with APIs to access their data, or directly supplying the tools for any business to manage its financial transactions on its own or for a bank to develop its digital offering (Bancbox, Open Bank Project, Plaid, etc.).
Banks that will successfully achieve transformation will need to leverage their knowledge of their customers to remain as the main point of contact, offering a wider and better range of services, whether sourced internally or through platforms where various specialist providers and customers themselves can interact.
The Transformation Of BBVA
BBVA, a middle size, mostly retail, bank in Spain, soon became aware of the depth and reach of the change faced by the banking industry when many banks in Europe, still thought their field would be perpetually shielded by regulations and user conservatism.
New technologies (e-learning platform, use of mobile devices) and new learning approaches (newsletters, on-the-job learning, MOOCs) were becoming an increasingly important way of providing a range of flexible training options that everyone could access. BBV embarked upon a goal to create a new work experience for the digital era.
They regarded the new corporate buildings then under construction to be a powerful instrument to accelerate change in their organization and set in motion a highly ambitious Big Data project. BBVA started launching new products designed and produced specially for the digital world, such as BBVA Wallet. BBVA Ventures helps the bank to stay on top of what is happening in the realm of digital banking. But the pace of change in the digital realm and the ongoing acceleration of the innovation cycle all around, further prompted them to speed up their transformation and turn around their organizational structure in radical ways to place the digital world at the center of their vision for the future. BBVA Digital Banking was established as a new Business Area.
BBVA Digital Banking: A Radical Organizational Change to Accelerate Transformation
The main purpose of BBVA Digital Banking was to speed up the Group’s transformation into a digital bank. The Area was directly responsible for developing existing distribution channels, adapting internal processes and designing a new range of digital products and services capable of delivering the best possible customer experience. The guiding idea was that the Area will, in addition to enhancing BBVA’s digital business and presence, work as a catalyst to transform the entire Group. The new Digital Banking Area’s mission has four key angles: a new, enhanced customer experience; knowledge-driven personalization using the best data analysis technologies; communication in clear, concise language; and access to products and services at any time and from any place. This new project management model entailed a new human resource management model.
BBVA Digital Banking brought together all digital ventures and initiatives throughout the Group and drove forward an ambitious project for change, which had two branches: transformation in project management and in human resource management This organizational structure reflected the Digital Banking Area’s goal of transforming BBVA’s existing activity and finding new, knowledge-driven lines of business in the digital realm.
So in the more developed markets, such as Spain and the United States, the Digital Banking Area’s scope of action extended to digital transformation of the entire franchise and the development of new business models and value proposals beyond the scope of conventional banking. Thus clearly, the creation of BBVA Digital Banking was a bold and insightful decision in aid of speeding up the Group’s digital transformation.
The Main Take Away: CHANGE REQUIRES LEADERSHIP
It was some time ago that BBVA perceived the risks and opportunities inherent in technological change, and for several years they had worked towards reinventing themselves and moving on from analog banking—however efficient and profitable it might have been by the standards of the twentieth century—into a knowledge-driven digital business of the twenty-first century. First, the construction over the past seven years of an entirely new technology platform capable of supporting the data capture, storage and processing requirements of digital banking, which were far more demanding than those seen in conventional banking. More recently, the launch of the Digital Banking Area had marked a turning-point in the transformation of their processes, structures, approaches to work, capabilities and mindset, in alignment with the demands of the digital world.
BBVA now sees itself in a position to lead the process of transformation of the banking industry and so become the first—and best—knowledge-based bank, fully in alignment with the digital ecosystem. BBVA also realizes that this is the kind of leadership they will need in future if they are to achieve their goal that BBVA should become the foremost figure in transforming the best of analog banking into the best of knowledge-based banking for the twenty-first century.
BMO, Bank of Montreal. is the fourth largest bank in Canada and serves more than 12 million personal, commercial, corporate, and institutional customers in North America and internationally. BMO recognizes that offering its customers a satisfying digital onboarding experience is essential to retaining and growing its customer base.
To focus on efficiency through technology innovation, process enhancement, and increased digitalization across channels, BMO implemented an enterprise-wide shared services platform in order to provide its customers and employees a simplified and responsive digital user experience.
In addition to user experience, assigning a piece of paper the value of 0.08 cents (based on cost for printing, scanning, transferring, storing, and destroying paper), once all products had been converted to eForms, the reduction of paper in its retail branches would save the bank CAN$132 million ($98.2 million) a year.
It was important to BMO that the modular build of the eForms and eSignature capabilities renders them highly reusable across the organization, allowing BMO to be more innovative in the way it offers the solution. The modular design of the platform enabled lines of business to follow the same workflow and to have access to the eForms and eSignature platform, regardless of the channel used by the customer or product chosen. The consistency of processes and user experience enables faster and smarter deployment of BMO’s digital capabilities and has led to notable improvements in the compliance and audit processes.
But, BMO did not go it alone. BMO partnered with Quadient and eSignLive by VASCO to design a universal enterprise platform that offers standardized eForms and eSignature and plug-and-play microservices capabilities. BMO deployed Inspire Interactive, a thin client, self-service customer communications portal, and Inspire Designer, to create elegant, standardized eForm designs that are rationalized, dynamic in nature, auto-populating, and QR-coded to simplify how BMO ingests documents.
Agile project teams were established, with representation across the bank, including staff from business, process, product, legal, compliance, and technology groups. Partnering with Quadient enabled BMO to create dynamic form templates, rationalize content, simplify scanning capabilities, and, where appropriate, reuse content across other documents.
BMO is now in the process of expanding the deployment of its eForms and eSignature capabilities across other core businesses, including commercial banking, wealth management, and capital markets, as well as internal functions.
BMO has more than delivered on its objectives. With the deployment of its platform across its 940 Canadian retail branches, the initiative is saving its 2,000 strong salesforce between 15 and 30 minutes a day on processing forms. Since its launch in October 2016, BMO’s eForms engine has generated approximately 1.4 million digital documents, equating to 2.2 million sheets of paper. In addition, efficiency ratios on the frontline have increased by 40% overall, with an impressive 80% efficiency ratio across the audit process.
Also one of the most substantive benefits of this initiative has been the automation and streamlining of the audit processes. This is critical if banks are to overcome the daily challenges of governance, increased information requests, and compliance requirements. It also goes a way to solving the struggle to resource audit and compliance functions and will reduce the heavy manual burden on audit and compliance professionals.
For a 200-year-old bank, one of the biggest challenges BMO faced was getting employees to adapt to the concepts of the Agile methodology and agile working habits. With legacy systems built over all those years and with a penchant for paper, it was important to communicate “the what, the why, and the how” of the Agile approach: The why being the benefits of an end-to-end digital onboarding process.
To accomplish this, the team put in place an education program that shows the benefits of digital transformation and the value of reusable components and tools that can quickly generate reoccurring savings.
Experian® is the world's leading global credit information services company. Experian has more than 16,000 people operating across 37 countries and every day it is investing in new technologies, talented people and innovation to help all clients maximize every opportunity.
From credit reporting to data services
On the list of great business challenges, one of the most daunting today may be this: Transforming an established enterprise built on legacy software into a fast-moving, agile organization ready to take on the digital world. The company morphed into being more of a strategic partner with the customer, helping to decide what type of product should be built, to better understand how customers want to access information. That shift—from providing standardized credit reporting, to integrating real-time data into a line of customer-driven services—encapsulates the transformation strategy that Experian is implementing today.
The vision: A single identity platform
When the current management team came on board, Experian had many different identity management systems—including products from Okta, Ping, RSA, Oracle, and MobileIron—implemented across various parts of the company. In shepherding Experian through the transformation process, the team’s first priority was to give developers across the company one set of tools, so they could build products in a consistent standardized way. Standardizing on one identity and authentication platform would thus be critical for unifying the company’s architecture internally and externally. For that single identity platform, the team wanted a cloud-based identity solution.
In April 2015, two months before the present management team came on board, Experian’s Consumer Services division had launched its Credit Tracker app, allowing individual consumers to keep track of and manage their credit in an unprecedented way. Global infrastructure and technology operations, which was responsible then, chose Okta because of the way it allowed Experian to bring usability and security together, to build a world-class mobile app.
The next step was deploying Okta to Experian’s 16,000 employees and connecting all their applications to it: financial systems, email, human resources systems, marketing platforms, and so forth. Experian also offers marketing services, fraud detection, and credit services to financial institutions, such as American Express, Barclay’s, Citibank, and Chase, so it was critical to authenticate that everybody who’s pulling information were who they say they were. For a such a large enterprise, the single authentication implementation had gone remarkably fast, effectively consolidating all internal and external Experian applications onto the Okta platform within one year.
On the consumer interface they used to provide a prescriptive way that they wanted to interact with customers. But the customers were saying, that they loved the information and services being provided, but needed to consume them differently. To meet those demands, Experian had to start building out an API services environment that would allow customers to programmatically interface with Experian data sources and pull the exact information they needed, thereby giving the consumer more control.
While Experian was not particularly unique in its quest for digital transformation, but getting the API micro-services economy right was extremely important. That’s why they needed to bolster platform by providing an API call that uses Apigee and Okta: Okta to make sure we’ve got the security right, and Apigee to make sure the right API call was being executed. The user experience is so much enriched by an API economy, that it will help Experian enter new markets, integrate business units, and expand its business.
Source: OCTA Inc.
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