The Meaning of Digital
Digital is one of the most important topics within the financial services industry and is affecting every part of the financial services ecosystem. Subsequently, financial institutions today are rushing to become more Digital. However, for many institutions it is hard to come to a consensus on what Digital means. As a result, Digital strategies often fail to take a holistic approach resulting in piecemeal initiatives or misguided efforts that lead to missed opportunities, weak performance, and/or false starts. Some strategies focus too narrowly on front-end Digital capabilities, some focus on the digitization of back end tasks, while others carve out Digital teams without a clear vision on how to drive Digital across the organization.
I see Digital less as a thing and more as a way of doing things. Digital is about unlocking growth and capturing business value by maturing Digital capabilities and leveraging cutting-edge and emerging technologies. Specifically, there are 3 pillars of any Digital strategy:
Digital Innovation
Digital Innovation requires institutions to review the entire way of doing business to identify opportunities for capturing new business value which may entail developing entirely new business models in adjacent markets or identifying new pockets of value in existing segments. In parallel, it is crucial to understand how customers’ behaviors and expectations evolve to identify trends that can deliver value.
Customer Experience
The second pillar of Digital is envisioning how to use new Digital capabilities to deliver enhanced customer experience. A deep understanding of the customer journeys across all channels and all lines of business is required to design and deliver the best possible experiences with a focus on flexibility, speed and efficiency. At the same time, real-time analytics and AI can deliver insights about customers that in turn drive marketing and sales decisions.
The best possible customer experience is driven by four interconnected core capabilities.
Digital Foundation
The third pillar of Digital is about the technological and organizational processes that support new Digital capabilities and allow an organization to be agile and innovative. The three building blocks of the organization’s Digital Foundation are:
With clear understanding of what Digital means, executives will be able to align on a shared vision that can be used to develop a holistic and actionable Digital Strategy to capture business value. A Digital Strategy informs organizations where to make the most impactful investments in key Digital initiatives to where to mature Digital capabilities to maximize benefits.
