Digital transformation is all about using information technology to radically change the ways we live and do business. Over the last years, I watched my local bank digitally transform itself. It’s a highly regulated, conventional and conservative outfit. Its bankers tend to be straight-laced, discreet, no-nonsense, down-to-earth. Their digital transformation wasn’t spectacular, but they did land a few firsts, while delivering a solid and stable performance over time, quietly and unobtrusively. Here are some lessons on digital transformation from - let’s call them the red-ties-and-black-suits (RTBS). This first of a two-part blog post looks at the steps related to products and operations.
The RTBS started pushing ahead with what it called “realignment” in 2012. A digital strategy, developed in 2015, was a key part of that realignment. Its goal was clear: to advance its business model, to make the required investments to secure tomorrow’s earnings, to meet emerging customer needs and to “identify the best courses of action provided by digitalization”.
1. Rethink your products and services
When you apply digital technology to all aspects of business, you improve and enhance existing methods and processes. But beyond that, being digital enables you to innovate and be creative, thereby “transforming” and leading to fundamental shifts.
For the RTBS, digital transformation means “adapting our products and services to the customer behavior which has definitely changed… to extend the existing scope of services to customers who are highly attracted by digital appliances and at the same time make use of novel business opportunities.”
Going beyond its traditional image as a brick-and-mortar bank, the RTBS adopted a strategy of selectively doing business with highly moneyed private customers, large companies and external asset management firms.
2. Digital transformation does not come cheap and is a long-term investment
In its 2016 annual report, the RTBS reported that general operating expenses increased to CHF 162.2m (+3%). Other operating expenses rose to CHF 59.7m (+3.6%) due to the ongoing modernization of its infrastructure and digital development. These covered in particular the expansion of its Internet presence, the introduction of the Twint mobile app for cashless payments, and digital projects to support wealth management and corporate loans.
The 2017 annual report showed that operating expenses amounted to CHF 176.5m (+8.8%). Other operating expenses increased to CHF 64.4m (+7.8%) due to investments in the realignment of branches as well as digital development. Specific projects included the introduction of a new e-banking system and the launch of an online asset management tool.
3. Reinforce your web presence, go mobile-first
Break your web and mobile initiatives down into logical stages. The RTBS first extended its existing desktop version of e-banking with a mobile version in June 2013. Customers can use their smartphone cameras to scan payment slips and authorize payments directly via mobile banking. They can also check their credit card expenses. The RTBS also integrated social media channels: from the mobile banking app, customers can contact the bank via Twitter or Facebook.
The RTBS then expanded its Internet presence in June 2016 with a portal that is clearly designed for mobile use. With that, it integrated a new e-banking system and a new mobile app that enables smartphone payments for private and corporate customers. In April 2017, it upgraded the e-banking system to enable the integration of further digital devices on the e-banking platform.
4. Consistently promote business channels and opportunities that open up through digitalization
The RTBS embarked on a strategic partnership in August 2016 with an online asset management company to expand its offers for investment customers with a strong penchant for digital services. The RTBS integrated digital wealth management software in its e-banking system, enabling customers to open an investment portfolio in three steps. Customers get an investment package optimized according to their risk profile and financial resources, and can adjust the portfolio to match their preferences. In July 2017, the bank expanded this offer with a system for managing assets online.
The second of this two-part blog post looks at the steps related to customer touchpoints.
Magnolia will be at Forrester’s Digital Transformation Europe from June 14 to 15 in London, UK and will give a talk on how its customers master digital experience challenges through integrating technology, removing silos and building agile platforms and processes.