One particular section of a Momentum at EMC World presentation seems to have deeply resonated with the audience – how perceptions can hold back progress. In many institutions and enterprises, I have noticed a way of thinking that, unless swiftly altered, might bring down the greatest of brands or the largest of banks. Much of it centers around the FinTech phenomena, but it is also intertwined with recent trends toward evolving IT to become more business-centric.
Here are three misconceptions of digital transformation that I encounter across the banking sector, and how one might think differently to carve out a lucrative future:
1. It is just a new tech revolution
For any technology to be successful, it needs to begin with addressing business requirements. Digital transformation may involve technologies to implement upon a strategy, but first it is about creating new business models. This means adapting to new or different needs of your customers – especially customer segments you expect to increase in volume or revenue percentage. (As I noted in my presentation, Millennials are key to future growth).
Start to identify new business opportunities by breaking down your value chain and creating greater customer pools and engagements. Only after that is clear, begin finding innovative and/or reliable technologies to implement your plan.
2. It’s just a new way to introduce mobile channels to existing platforms — in other words, just a new way to do old things!
Certainly mobile users are important, and the ability to serve functionality through devices is a new baseline (“mobile first”). But this misses the bigger opportunity mentioned in the first misperception above — that transformation is about you finding new ways to do new things.
In today’s app-centric, fast-moving, time-sensitive world, customers evaluate you against their latest experience. This may not be another bank providing a mortgage approval in two weeks. It may, in fact, be an Alibaba or PayPal offering lines of credit at the touch of a button. They may have powerful capabilities to offer these services because they already eliminated customer charges and banking branch costs when they crafted their business model to begin with.
Mobile functionality is important, but again, only after you understand customer segments and your role in the value chain.
3. It’s a threat against our core business and we need to protect against it
As with any market disruptive activity, the effects are not all negative or all positive. Yes, customer-centric FinTech start-ups can quickly tear down your revenue streams. But simply defending against such competitors can miss your grand opportunity to reinvent your business for the better.
Specifically, digital transformation can open up new cost efficiencies. As you reposition yourself in your customer’s value chain, consider how to implement:
- Automated processes to expedite customer services while reducing staffing and overhead costs (how about that mortgage approval process?)
- Third party service plug-ins or partnerships that negate the need to perform in house development and testing, while helping retain your most lucrative customers or deliver exciting innovations
- Infrastructure cost reduction, perhaps by moving some applications to a cloud model or decommissioning legacy apps and migrating data to regulatory-compliant systems
Looking at digital transformation as a way to catalyze your content management efforts is a step in the right direction. It is precisely this movement to the digital transformation wave that offers an opportunity to change your relationship with customers and the technologies that solidify that relationship.
Thinking differently about three misconceptions of digital transformation can help organizations carve out a lucrative future.