WHY DIGITAL TRANSFORMATION IN FINANCIAL SERVICES IS ABOUT CULTURE FIRST, TECH SECOND

Stuart Templeton, Head of UK at Slack 

 

In today’s world, there’s no such thing as a ‘non-tech fin’. Every financial services company needs to consider itself a fintech in order to bring about the innovation, speed, and transparency that customers expect, and that’s why most are pumping significant investment into their digital transformation efforts.

Part of the challenge faced by traditional incumbent banks is that they rely on legacy core systems that stifle the speed of change. These core systems were not built in an API first era. The good news of course is that the obligations of PSD2 and open banking have gone some way to facilitate future innovation.

While legacy banking platforms do continue to present a technical challenge, the human one can be even greater. Traditional institutions are often faced with the prospect of rebuilding their culture from scratch in the pursuit of becoming digital-first. Like many industries, the fundamental challenge is one of coordination: the creation and maintenance of alignment over time.
Couple this with the fact that the expectations of today’s workforce are changing, then companies in the industry have a real job on their hands. A growing percentage are digital natives, and millenials – who greatly value trust and transparency – make up the largest proportion of the workforce today. So how have businesses in the industry historically ingrained culture, and how does this need to change?

 

Old ways of working – Team A, and Team B

Traditionally, the culture within large financial organisations has been separated by two distinct teams: operations, and tech. They are driven by seemingly opposing forces – one by GANTT charts and lofty business goals, the other by agile software delivery and customer obsession. Often, the two don’t even speak the same language, let alone collaborate and share ideas. Of course there are digital projects, but they aren’t the embodiment of the business, and often tech teams find themselves battling to get buy-in from internal stakeholders who are somewhat removed from those that drive innovation.

Part of the problem is even the notion of having digital transformation projects – there is no such thing in today’s environment – as digital is an overarching movement, and financial services institutions must think of themselves as ‘digital factories’ in order to see a marked change. It is no longer enough to deliver tech updates both internally and externally once every few months, with speed diminished by layers of bureaucracy.

What needs to happen, then, is that these two business segments need to find a way to blend that helps the old incumbents forget their binary ideas of teamship from time gone by and instead let them come together to become one unit. Flattening the established hierarchy so that workers from across all lines of the business can communicate, share ideas and identify problems in real-time is, after all, the key to addressing the transformation gap. They need to think on their feet and iterate as they go: it’s agile thinking, but permeating outside of just the software delivery cycle.

 

Eating the elephant – one bite at a time

The solution, in theory, is relatively simple: companies need to break open the silos of information created by technologies like email and ensure anyone within a business has access to the knowledge and skills they need to make their projects a success. But of course, in practicality, this can present a seemingly insurmountable task.

Using technology to create an agile and transparent working environment that fosters collaboration is key for many financial services organisations that want to see real tangible results from their investments. Digital natives such as TransferWise and Starling Bank are getting this right by prioritising a decentralised business model, one that empowers collaborative working and knowledge sharing that in turn has a positive impact on employee satisfaction and retention.

They do this through collaboration hubs that provide a rich, permanent, searchable record of knowledge for everyone in the organisation.

 

Looking ahead: Team ‘us’ 

Predictions are very difficult, but in five years’ time we can expect to see a greatly altered perception of the financial services industry. We can expect that digital communications tools will continue to play an integral role in the evolution of their workforce culture, helping to bring the right people together internally within the business, as well as strengthening relationships externally with partners and customers alike.

Ultimately, in order to keep learning and improving, banks need to ask questions of themselves as competition and customer demand becomes more fierce: “Why are we doing this?” “What’s the benefit here, and who are we considering in the pursuit of this goal?”

To answer these things, a culture of collaboration and openness is key – underpinned, of course, by the tools that empower it.

 

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