The Digitization Of Banks Is Sure To Fail

Digitization-Of-Banks

Most banks are pushing ahead with their digital transformation, but a lot can go wrong. Pegasystems names typical misjudgments that banks are faced with in their digitization efforts.

Even if online banking is now standard, many banks continue to struggle with digitization. They stumble with the smooth automation of internal processes, the seamless connection of their legacy systems, or the establishment of new, innovative customer services. No question about it, digitization is not a sure-fire success, but often simply traditional structures and ways of thinking slow down projects and let investment ruins arise. In the experience of Pegasystems, which, as a provider of innovative software for the drastic simplification of complex work processes, supports many banks in digitization, these are the most severe misjudgments:

  1. Digitization is a matter for the IT department. Although digitization has a lot to do with IT systems, software, and online services, it is not a classic topic that the IT department can take care of alone. The specialist departments have to have a say and should even take the lead – after all, the digital solutions should eliminate their problems, increase their earnings and inspire their customers. 
  2. Banking is banking, and IT is IT. Business and IT can no longer be separated since today, almost all business processes are permeated by IT and are based on data. One could say: IT is now part of the core business of a bank. Therefore, close cooperation between the specialist departments and the IT department is necessary – both need understanding for one another. Citizen developers promote exchange and help to implement technical requirements directly in the specialist departments.
  3. We create the big bang. In practice, it is usually impossible to solve several problems in one digitization project – often because the plans are too rigid and the overarching goal is missing. In addition, the big hit takes a long time and has to take too many different interests into account, so that in the end, no one is satisfied. Small digitization projects that lead to constant improvements and provide empirical values ​​and reusable solution components for other projects are better. In contrast to Minimum Viable Products (MVPs), Minimum Loveable Products (MLPs) meet functional requirements and show the solution’s user experience. This motivates users to try things out, leads to better feedback and ensures that the finished solution is better accepted later.
  4. We have already planned everything. Long-term and inflexible plans are unsuitable for digitization projects because digitization needs results presented quickly to arouse enthusiasm and collect feedback. This works best with agile methods of cooperation because they stimulate the exchange between all those involved and regularly subject all goals and project steps to a reality check. In this way, the teams can quickly take countermeasures in the event of problems, learn from mistakes and react promptly to changes in the market so that the overall goal is never lost sight of. 
  5. The employees will go along with you. Trusting that employees recognize the opportunities of digitization and enthusiastically participate can work – but does not have to be. Because with digitization, tasks and job profiles change. Employees need new skills, but they can also easily acquire new skills. Banks have to support and encourage this and communicate a lot with their employees. Very important here: Reduce fears, for example, of new tasks or losing a job.
  6. Automation solves complex challenges. Automation is undoubtedly a key to successful digitization, but all too often, it is limited to the automatic execution of the most straightforward processes. This helps employees in day-to-day business but hardly improves the customer experience and does not increase earnings. Banks implement intelligent automation with workflow tools, case management, and a rules engine that recognizes relationships, calculates offers, and supports employees with specific recommendations for action in complex decisions – and can even control processes themselves.
  7. We need more new tools and portals. Banks like to focus on introducing new tools and the development of stylish portals at the front end. However, the applications are often poorly integrated into the overall IT ecosystem, so that new silos are created. On the other hand, the portals are often just a facade – behind them, there are still manual processes. Banks ensure that new solutions can be seamlessly integrated with open platforms and interfaces and digitized processes across departmental and company boundaries.
  8. We specifically improve individual applications and channels. When it comes to digitization, the focus is often on specific frontend systems such as apps, chatbots, or contact centre solutions, which means that business logic is built directly into them. This has several disadvantages: on the one hand, banks have to maintain the rules for each system separately, and on the other hand, only the IT department can make changes. The business logic is better off in a separate layer between frontends and backends, where all systems can access it, and the specialist departments can maintain it.
  9. We know what the customer needs. Many banks believe they know exactly what customers expect and are busy digitizing. If the customers – end customers or users from the specialist departments – then do not accept the new solution, they will be amazed. It would be easy to ask private customers, corporate customers, partners, and employees specifically about their wishes and requirements so that the new processes and services solve their problems and simplify their everyday lives. You can even include them in the development, be it a citizen developer or through good digitization platforms that allow you to try out different process variants.
  10. Digitization is exhausting but necessary. If banks see digitization as a tiresome but necessary duty, they stifle their employees’ willingness to change in the bud. Digitization can be fun if you reduce annoyances in everyday work or find new services that customers gratefully accept. However, this requires constant communication and motivation – and the will to allow passion and experiments that produce unusual solutions.

Also Read: Trends In The Luxury Sector – From Digitization To Brand Identification

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