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Choosing the Right Digital Transformation Company

Choosing the Right Digital Transformation Company

At the Pandemic’s outbreak, companies worldwide were suddenly exposed to a surge in digitalization. Those who pledged to keep operations going were given free rein to do whatever was necessary. Returning to work, however, many are confronted with the fact that digitalization’s north star is beginning to wane. Companies now face the same uncertainty over digitalization that they did before the Pandemic when investment priorities were clear.

After all, meaningful and long-lasting digital transformation requires businesses to prioritize product and process changes over technology investments. However, many companies have difficulty seeing past the immediate benefits of new technologies.

Choose the transformation partner after understanding the FI’s Business Model Canvas

Business Model Canvas – The nine basic building blocks

Starting with the value proposition, the backbone that summarizes gains delivered to customers, the right side of the equation (refer to above) discusses the primary customers and how a company makes its money (via customer relationships and channels).

The left side captures the business’s operational aspects – the essential resources, partners, and activities.

The two sides of an organization’s financial bedrock are cost structure and revenue streams – the outcomes transformation partners focus on (lower costs, increase revenues, and boost profits).

The right digital transformation company helps you map out the current business model.

Finding where you currently are is the first step in planning your next move. The right partner will begin by detailing your current business structure. If your present business model is more organic in nature than engineered, going through the nine sections of the canvas will provide a useful starting point for your transformation efforts.

Transformation Partner’s next port of call? Digitizing Operations

Using digital to optimize, simplify, and rationalize existing processes is an early step in the digital transformation path. Facilitating a Bank to embrace emerging technologies and tools like AI, 5G networks, and the internet of things (IoT) is crucial to unlocking its stellar transformational potential later. A company may start its journey toward digital transformation by digitizing processes, and as it grows, it may redesign processes from the ground up. That is why a CIO, CXO, or COO is a better leader for digitizing operations. Research shows their inherent process expertise (and managing KPIs) that ultimately save time, solve business problems, and serve customers.

Directing Action through the power of Data and Insights

Data on how a business interacts with customers, employees, and clients is easy to find and assess so that technology can have the most impact. The correct transformation partner understands the essential nature of capturing valuable data. Furthermore, they turn data into insights with the right skills and tools. Here, technology enlists analytics or the science of making sense. After all, testing new business models, products, or services is as much about getting it right as proactively avoiding missteps.

The Right Digital Transformation Company focuses on Outcomes.

In a digital transformation, often “transformation” wins over “digital.” indeed, long-term performance and meeting the financial metrics are crucial for a digital partner. More importantly,  the results must be fed back into the processes (retroactive feedback loop) so that future insights are more accurate, practical, and valuable.

In summary,

Finally, the change in mindset, culture and the FI’s talent base makes for sustainable digital transformation, such as training and retraining employees to be ready for the future. And in choosing the appropriate digital transformation partner, the leadership sends out a clear signal to the rest of the organization: how to build a bridge that respects the past and advances fearlessly into the future.

 

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Top 3 Important Pillars of Digital Transformation

Top 3 Important Pillars of Digital Transformation

Many businesses have grown their agile-enabled units at a fast rate. But speed is only the start. How people work will need to be expanded quickly to determine digital’s actual value. There are risks to making such a significant change, but in the digital world, staying the same is the most considerable risk of all.

Digitization is suitable for most businesses, so they don’t need to be sold. Research from McKinsey shows that companies have high goals: in the next three to five years, they want digital initiatives to lead to growth and cost savings of 5 to 10 percent or more each year.

The Challenge of Scaling Digital 

It’s hard to set up the tools to digitize at a large scale. Because digital touches so many parts of an organization, any extensive digital program needs to coordinate people and technologies in a way that has never been done before.

For example, a strategy to increase revenue from high-value customer segments needs analytics-based insights into which buying journeys generate the most value, a clear vision, a plan for capturing that value, and technologies and tools to digitize customer interactions.

The Three Pillars of Digital Transformation 

Strategy, Strategy, Strategy. While a sector’s digital maturity influences how an organization acts, most approaches fall into one of the following.

  • Incumbents and market leaders do things to protect and take advantage of their current business models and advantages.
  • Market upstarts and challengers use their existing assets to improve their business model and customer relationships. They focus on building the skills they need to move quickly into new markets once they have been found.
  • Digital adopters use the benefits of digital to compete in existing markets and even change their business models.
  • Digital natives enter new markets and change how to compete based on price, experience, or product.
  • Finally, some orbit-shifters shape ecosystems by setting the rules that define the competitive landscape and recast whole value chains.

Digitizing processes have less to do with technology and how companies approach development.

Digital leaders drive value quickly by focusing on small but essential solutions targeting large-value CX journeys and expectations. This is more than automating something that is already being done. When a business goes digital, it often has to rethink its entire business process to strive for higher optimization and remove redundancies.

The People Organization

Companies know that models that are rigid and move slowly no longer work. The challenge is moving toward a more agile, flexible, and collaborative structure while keeping the rest of the business running smoothly. Successful incumbents become more flexible by making things easier.

They let structure follow the strategy and align the organization around their customer goals, focusing on fast, project-based systems owned by working groups with different expertise, from research to finance.

Getting a clear picture of the company’s “Digital Quotient” is an essential first step in identifying its digital strengths and weaknesses and identifying management practices that can improve financial performance.

Leading companies today have incubators to prototype the early stages of a digital transformation to build up their skills. But these skills need to be built into the central business to succeed.

The saying “what gets measured gets managed” is still valid regardless of the business’s model. Metrics that focus on the customer journey, like customer lifetime value, omnichannel behavior, and share of influence across stages of the decision journey, are essential to the most successful digital companies.

The Technology that Transforms

Most legacy companies have traversed through multiple phases of IT transformation in the past and know that updating legacy architecture takes years. But today’s changing market needs technology that can speed up innovation, automation, and personalization.

So, the best companies are moving to an IT model with speeds that allows them to make programs for customers quickly and make changes to their core systems, which are meant to be stable and manage data well, more slowly.

This usually means that high-speed IT teams are in charge of quickly iterating software, installing updates in beta, fixing bugs and kinks in almost real-time, and installing the software again. They aim to keep adding to a fast development infrastructure that can support near-instant deployment across channels and real-time decision-making.

Additionally, recent DevOps improvements ensure that continuous delivery makes it possible to speed up time to market and cut costs dramatically.

Conclusion

The Way of the Digital, Digital transformation takes time and comprises steps that are sometimes evolutionary and sometimes disruptive. Digital transformation has been called a journey by everyone who has been a part of it.

Usually, companies start by improving their IT and digitizing their operations. Then they move on to digital marketing and building new business. But all three pillars are essential for digital transformation so that they may happen in a different order.

The key to success is understanding that digital transformation is not just one thing but many different things. Having the right leader, resources, and ways to measure success are all the right notes a company must hit as part of its journey.

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Future of Corporate Banking in Digital Transformation

Future of Corporate Banking in Digital Transformation

While the global corporate banking landscape changes dramatically, banks are rethinking business models to stay competitive and bring innovative offerings (be it in retail, corporate, or investment banking). Earlier, corporate clients were grouped in segments that suited the banks and not the clients (like SMEs were placed in retail banking, and larger cap companies came under the purview of commercial and investment banking or even M&A teams).

Leading banks are dedicating more of 2022 to offer solutions that meet such clients’ treasury needs – loans or leasing; these solutions are vital in mitigating risks related to import-export and other areas that impact profits and growth.  

What is the future of corporate banking? 

2022 banking trends are making headlines (rise of the super app, the growth in digital currencies, spending money in the metaverse, boost in ESG banking policies, and new moves for the cross-border payments area), but the future of corporate banking is closely linked to digital transformations.

As the industry matures, more free flow of data among banks, their clients, and third parties will be seen. These corporate banking ecosystems will surface new operating models that allow significant disruption. As an example of just two, watch out how this segment brings a single gateway for frictionless access to services and effectively mitigates risk through multi-dimensional data analytics.

The long-term digital impact on various corporate banking 

At this point, it would help get a top-level view of the ways digital initiatives transform multiple lines of business.

  1. Straight lending: Revenue increases as online applications are processed with quicker TAT. Costs decrease as workflow/straight-through process automation improves.
  2. Cash management: Revenue increases as the cash management tools get more functional and assist in better lead generation. Cost decreases as cash management platforms improve, thereby increasing the straight-through-processing share.
  3. Specialized finance: Across trade/supply chain finance, leasing, and asset-backed finance, successful digital initiatives increase revenue through better marketing push and superior lead generation. Simultaneously, cost decreases with digital workflow optimization efforts.
  4. Capital markets: For this line of business, going digital offers higher convenience (via self-service options) and decreases costs from process efficiency gains.

Once we understand how the various LOBs would respond, it is worthwhile to talk about the significant shifts in the corporate banking industry.

Essential digital levers that are driving growth in corporate banking 

Reimagining digital tech stacks: As digital transformations are unique to the entity (given their start points and end goals), the difference would come as corporate banks will compete on the technology stacks that shape their vision.

CX investments: Like retail banking, the growth plays for corporates revolve around how best customer journeys are aligned with product life cycles and how robust customer behaviors are anchored to market scenarios.

The boundaryless customer: Post COVID, like employees, the best banks understand their customers are free to transact from anywhere. How quickly the transition to “anywhere banking” permeates into the operating culture will differentiate the winners.

Ecosystem advantages: In addition to what has been stated, the increasing prevalence of multi-party transactions, Corporate APIs, open banking regulations, and available data are potent variables set to test a corporate bank’s appetite (and speed) for change.

Finally, any digital and corporate banking discussion is incomplete without talking about the Treasury APIs.

The rise and rise of Treasury APIs

Post-COVID, SMEs and larger corporates must invest in increased connectivity and straight-through access to supply chains and ecosystems. Here, banks have a unique opportunity to support their corporate clients’ increasingly complex needs through Open Banking and (APIs).

Be it – real-time information access, status updates on balances and payments, straight-through and real-time processing of transactions, reduced integration and process complexity, and intelligent multi-currency liquidity management solutions – corporate clients are eager to get all the help they can.

Similarly, some of the world’s most influential banks – Citibank, J.P. Morgan, DBS, Bank of America, and Wells Fargo – are already in the game. Their treasury and payments APIs are up and running, reeling in specific benefits like:

  1. New revenue streams via monetizing enhanced services for corporates.
  2. Capturing real-time data for data-driven decisions by the treasury or commercial sales
  3. Resolving issues in reconciliation to improve STP rates in payments and collections
  4. Scaling services that will enhance operational efficiencies and lower internal cash risks.

Conclusion

In the final analysis, embedding innovative technologies (such as robotics) along the value chain, industrializing core production, and redefining the IT and operating models will prove significant in redefining their product offerings. Moreover, emerging as a critical differentiator will be the advanced analytics DNA competency. This will help banks scale use cases and pursue continual improvement.

Eventually, the future of corporate banking in digital transformation will come from how quickly the financial entities digitize their processes end-to-end to increase customer satisfaction and reduce costs by building digital customer-centric journeys.

 

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Top Pillars for Successful Digital Transformation in Banking

Top Pillars for Successful Digital Transformation in Banking

Interstellar exploration begins to go mainstream with space tourism, fossil fuel cars make way for electric vehicles, and metaverse captures public imagination with its immersive reality just as the internet had cast its spell in the early 2000s. The winds of change blow heavy.

As business models in well-established industries change in the face of disruptive technologies and customer expectations, the banking industry leaders are hard at work. After all, creating new digital approaches offer both competitive differentiation and unrivaled economic value. 

How is the banking landscape fundamentally changing? 

Earlier banks owned each value chain layer – creating, packaging, and distributing its products. Neobanks offered a digital alternative to traditional offerings. Both entities had business models that were linear and vertically integrated.

Enter the digital-only players.

Fragmenting the value chain, they are unbundling traditional products into micro products or services and adding their offerings on top. The outcome of this vertical disintegration? More effective customer propositions.

This non-linear and adaptive business model is surfacing weaknesses of the incumbent banks like never before.

Today the challenger strategy can quickly configure and scale out innovative products with faster go-to-market speeds, lowering customer acquisition costs.

To make this all possible is, in a nutshell, the story of digital transformations in banking.

So, if digital-only players outperform their older peers via product componentization and respond quickly to market disruptions, what can we learn from them?

Successful digital transformation for banks rests on the following pillars.

1.)  Meeting New-age Customer Expectations.

 Recognize these players – Chime, Afterpay, Klarna, Stripe, Wise? Each has not only acquired tens of millions of customers but also created a product category by fulfilling a latent need that the more prominent players missed. Chime focussed on fee-free overdrafts and payroll accelerations. Afterpay and Klarna expanded the credit market with “buy now, pay later offerings,” Wise disrupted retail forex and debuted on London’s stock exchange with a market value of $11B.

The quick learning? Awaken to the customer who wants the best of “all” worlds.

Using digital transformation levers, the new players can offer the end customer the flexibility and transparency for their DIY (Do-it-yourself) Banking. DIY banking – combining services from different providers – is more than a trend; it promises to hardwire into a buyer purchase attribute.

2.) Adopting All-Inclusive (AI) Artificial Intelligence.

Slowly but surely, AI banks are populating the horizon. Understandably, AI initiatives emphasize technology, and data infrastructure is humongous.

It begins with a long-term robust business strategy that is hyper-focused on delivering superior omnichannel journeys and CX. To make the execution cost-efficient, investments are needed for modern, scalable platforms for D&A. Finally, along with military-grade secure access and cloud infrastructure, the banking cores have to be highly configurable and powerful enough to support scalable operations.

The learning that comes from AI banks? Reimagining customer engagement by unlocking new value through higher efficiency, expanding the market access, and increasing the customer’s lifetime value.

To make this pillar work, leading banks combine intelligent value propositions with seamless embedding into partner ecosystems and create more innovative experiences.

3.) Clarity on the transformation strategy.

Before the investment dollars are spent, and armies of technologists descend, banks must be clear about the fundamentals – what is the legacy we are chasing? Which consumer segments are must-haves, and which are good-to-haves? And what value is core to us as a bank?

Answering these questions sets the ball rolling to decide the scale and scope of the digital transformation. This clarity eases cost pressures, allays employee job anxieties, reaffirms risk appetite, and offers an accurate before-after assessment.

Basis the mentioned strategy, banks can go one of three ways: Skin – Tissue – Cell.

Firstly, it could work on the packaging or the ‘skin’ layer (self-service customer channels and models and digital interfaces for banks’ analog processes). The second approach goes more profound at the ‘tissue’ layer (APIs allow IT asset interfaces, incorporating data analytics, creating consistent omnichannel CX).

Finally, the third kind of transformation works deepest – the ‘cellular’ layer. This approach concerns digital native core, third-party and ecosystem partnerships, digital marketing, high-end data analytics, and bringing on board (or outsourcing) tech capabilities that are strategic to the banks’ core vision.

Conclusion

Along with the mentioned three pillars for successful digital transformation for banks, there are equally pertinent aspects to be taken care of. Like deep focus on creating a niche (or micro-segments) by experimenting with innovative offerings, renewing attention to the evolving ecosystem and the system aggregators landscape, and finally, constantly clearing the obstacles on the path to profitability by boosting the organizational readiness through financial education.

 

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Advantages and Challenges in Digital Transformation in Banking

Advantages and Challenges in Digital Transformation in Banking

As the digital transformation in Banking snowballs into an inflection arc, it is worth remembering that preparations for it didn’t happen in a vacuum. Information technology that boosts productivity and improves the bank’s process quality has been mainstream for a decade. The next stage – distribution – accelerated by the internet explosion (especially across the developmental economies) got an unexpected shot in the arm via the pandemic. Now, the tipping point nears as emergent technologies (especially AI, ML, 5G, and IoT) fundamentally change banks’ business models and user experience.

Banks at the Crossroads

Incumbent banks (global or regional) are like deers blinded by headlights on highways. On one side, riding on their scale and distribution prowess are the fintech start-ups and neo-banks, and on the other are the tech giants – the data masters – who, with their digital payment apps, are helping customers bypass credit or debit cards instruments (consider Ali Pay or WeChat Pay in China, as one example)

Advantages of Digital Transformation in Banking

  1. More value, quicker, at a lower cost. Traditional banks realize that the three variables – values, speed, and costs – are the lowest common denominator. More customers than ever are online, and the way they interact (with their banks)is changing fast. From rethinking business models to strategy shifts in customer acquisition to engaging customers via omnichannel platforms, legacy banks intend to seize advantages in the hypercompetitive market. Offering faster, cheaper, and more nuanced services are undeniably the most significant digital advantage.
  2. Ability to create meaningful experiences. Focused on expanding the convenience and cost-efficiencies, banks are reimagining the user experience. This could mean adopting front-end initiatives (making self-administration options friction-free) or back-end data architecture investments that replace out-of-sync customer information or even patching up the fragmented portions that jar user experience across channels. Said, embracing digital transformation is one way for banks to offer intuitive services by maximizing touchpoints.
  3. Opportunity to stand out from the competition. Embracing digital transformations allows banks a powerful window to reframe what “growth” means. One way for a legacy institution to seek a different future is via metrics and how they can translate operational metrics. Consider this. Instead of the standard performance measure of the rate of digital customer growth, a more realistic metric can be the ‘cost-to-income’ ratio. Another opportunity that digital transformation brings is the chance to cultivate a digital culture, both in terms of mindsets and organizational rituals.

Challenges of Digital Transformation in Banking

  1. Employee fears being replaced. Digital transformation gathers stiff resistance from employees who are skeptical (and detractive) of the entire operations. Rather than seeing the change as an opportunity to upgrade market-worthy skills, many employees – consciously or not – feel powerless. A practical and pre-emptive step is to gather employees ahead of time and help them map their influential past contributions to the components of the digital future. Doing so allows them to reclaim control of the situation.
  2. Digital Transformation is not about technology. Force-fitting or setting the business strategy after deciding on the transformation mandates is like putting the cart before the horse. Undoubtedly, banks are advised to focus on speed, innovation, and digitalization, but these levers are to be used in the service of an overarching growth plan and market-first aspiration. For instance, before a bank invests in virtual digital technology, it needs to be clear that it is a means to an end. This case quickens the speed-to-market by reducing the time from design to sampling.
  3. Piece-meal approach. Digital transformation practiced in its actual avatar is an all-encompassing endeavor. A comprehensive banking solution offers long-term rewards for banks engaged in retail, corporate, SME ops, or wealth management. This solution has components that interlock user experience management, identity & access management, process digitization, open banking via APIs, and cloud deployment. To minimize the risk of failure and unlock the full potential of digital transformation, banks need to conduct deep dives across technology, domain, digital methodologies, and other intellectual property.

To sum it up, digital transformation is today’s game-changer. Nevertheless, it has to be approached with knowledge and enthusiasm because market platforms, while critical, are insufficient for effecting a comprehensive on their own. Singular vision is indispensable for banks to achieve scale, sophistication, and agility in their unique transformation journeys.

 

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