A quick internet search for “digital transformation” garners millions of results, including ads for companies offering this so-called service, books on the subject, and the all-important definition of digital transformation. This abstract concept is, in practice, merely the combining of technologies to drive strategic advantage. The process is not a new topic for CIOs, especially those at large banks who have already begun the undertaking of a digital transformation, forcing smaller institutions to try and compete.
For many smaller to mid-sized institutions, however, the resources are not available to begin a full digital transformation, or they believe they are already doing enough. Competing on this level requires a dedication to technology that is not common among smaller institutions. By and large, financial institutions that do not offer services such as remote deposit capture, online account opening, or even just mobile banking are being forced to invest in technology quickly, be acquired, or even close entirely.
"For an organization to truly change and accept technology in new ways, management must both dictate and show how employees should act regarding technology"
Unfortunately, for many small institutions, the process of an enterprise-wide digital transformation is out of reach. Large initiatives such as this are time and capital consuming. Even for institutions that have already invested in technology, many times analytics efforts are siloed, integration between platforms is clunky, and technology efforts come up short. This incomplete initiative is nearly worse than no investment at all.
While most financial institutions have invested in analytics (increasing regulation has made this a necessity), few have taken the time to combine analytics efforts. In these situations, marketing, finance, operations, and IT all have different analytical systems and even potentially different database systems. The disconnect between departments limits the analytics potential of an organization and creates a distrust of data as employees are forced to determine which “answer” is right from which department. In a situation of conflicting figures, an organization must find a way to centralize analytics and eventually combine departmental efforts. By instituting an enterprise data governance policy, financial institutions have the potential to develop a single source of truth, that is one accepted answer for every potential measure. This, despite its relative magnitude, is only a starting point on a much larger analytics journey.
How organizations use their data is only one piece of the digital transformation puzzle. For financial institutions, a significant portion of the rest stems from how customers interact with the institution and how the institution interacts with its customers. Pages and pages of technologies to implement for a digital transformation can be presented, and an institution could implement them all and still gain nothing. In this situation, what is lacking is a cultural shift. Culture represents the most significant pitfall of change as management fails to communicate its vision to employees, and technology initiatives fail as employees would rather keep doing things the way they always have. For an organization to truly change and accept technology in new ways, management must both dictate and show how employees should act regarding technology.
The need for digital transformation within financial institutions is evident, and widely recognized, but the extent of the process is often lacking. A conglomerate effort is required across the departments within an institution for clarity and success. This effort must then be passed on through a cultural shift spurred by management communicating the changes and the goals associated with them. Once these elements are brought together, a digital transformation is possible, even in smaller institutions.