By Aamir M. Butt
As I have been asked on various occasions about the role of technology and business people in devising and executing digitalization strategy, I thought it would be my moral and professional responsibility to share my unbiased views based on my past experience in the best interest of the banking sector of Pakistan.
In this article, I have shared my personal views based on my experience of spearheading both technology and business teams for more than 5 years as part of one of the largest banks of the country and this journey remained very successful as far as the growth of digital banking is concerned which was over 500% in new customers acquisitions in just 3 years’ time and launch of a number of industry-first features which includes Voice-Assisted Banking, Personal Finance Management, Proximity Marketing, etc.
Since the emergence of digitalization in the financial sector, or more precisely the rise of digital banking, different local banks have adopted different strategies and teams’ organization models to accelerate digitalization.
All digital channels (internet/mobile/call center) or other digital banking specific technologies were already there since last two decades but the term ‘digital banking’ was coined and got rapid attention by the banking industry with an aim to focus on the growth of digital technologies.
This was mainly to reduce the operating cost which is quite high when serving customers through brick-and-mortar branch model and increase business efficiency through automation and data-driven business decisions, cross-sells/up-sells, etc.
Secondly, the 24/7 availability of digital banking services to customers from anywhere became one of the key factors for customers in the selection of the bank of their choice, thus the focus on digital channels became imperative for banks.
Needless to mention, the growth and success of digital channels can only be determined by the number of new customers acquired on digital channels, digital products sold to them, or digital services subscribed by customers and in business terms, we call it channel or product growth.
As different banks followed different strategies, some of them did very well in certain areas but still encountered challenges; to firstly understand what really digitalization means for banks and secondly, how it is really going to benefit the business, as, after all, these investments under the realm of digitalization are meaningless if it has no business impact.
Based on my analysis of different local banks and their strategies over the last 5-6 years and, of course, speaking from my own experience of successfully leading both business and technology teams being part of one of the largest banks of the country which progressed very well from digital banking standpoint by recording a growth of over 500% in new customers acquisition on digital banking platform within a time span of just 3 years, following are some lessons learned which should be kept in mind while devising a strategy for digitalization:
- Few banks took multiple initiatives around digital banking but these were limited to traditional self-service banking channels like ATM, internet, mobile, or branch-less banking as business teams were spearheading technology transformation in these banks and they are usually familiar with only this piece of digitalization. Whereas digitalization is a byproduct of technology ecosystem which has to be evolved around:
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- Data/AI-driven intelligence to augment cross-selling/up-selling and better decision making right from the salesperson sitting in a branch (e.g. what’s next best offer for any particular customer entering branch) to the top executives taking strategic decisions (e.g. Analyze Deposit or Loan Portfolio and determine risks)
- Automation across all business verticals to bring in efficiency, security, and integrity which ultimately improves customer experience, satisfaction, and loyalty with the bank.
- Exploring and developing new digital self-service banking options to facilitate digital transformation by shifting customer footfall from branches to self-service channels, allowing branch staff to focus more on customer relationship development, cross-sell/up-sell, and meeting deposit targets.
- Adopting best practices and methodologies to bring in agility in designing and delivering technology solutions with reduced time to market.
- Involvement of business people (who carry business-specific academic qualification and professional experience) into technology solution design and implementation compelled them to focus on technology piece of digital channels/products which is not their forte thus poor solution design/experience and derailing of project timelines was a common dilemma.
- Focus on the growth of digital channels and products from a business perspective like customer acquisition, generating new revenue streams and income opportunities, and promoting digital products and channels through effective sales and marketing strategy was missing as business people were mostly busy on the technology implementation side.
- In some banks, Digital Banking Group is also spearheading the technology side of Digital Banking products, and the role of Information Technology Group is limited to enabling back-end systems (e.g. core banking system). But again, in this model, technology teams are in fact part of the Digital Banking Group and they are the ones who are taking care product design and implementation part, not the business people.
Chris Skinner is one of the most influential people in technology, and known as an independent commentator on the financial markets and fintech through his blog, Finanser.com. A big part of the problem for traditional financial institutions, Skinner stated in a speech, is that “94% of people in banking C-suites have never had any tech experience in their professional life. How can they create a digital vision?”. Banks have all the “fin” but not enough “tech,”’ he believes.
In the below section, I have listed various activities around product development which are divided into two categories in accordance with the role of Technology and Business People to produce optimize results and increase the productivity of digital banking teams:
For Technology People:
Product Development means the Design and Development of Software Products and Solutions with cutting-edge Technologies and amazing User Experience.
- Understanding technology needs of different business verticals and taking initiatives not only to meet current but also future business needs in order to ensure business growth and continuity.
- Designing and Development of Products as per approved product programs and business requirements
- Developing and expanding technology ecosystem to accelerate digital transformation across all verticals of businesses
- Coordinating with technology vendors/partners to explore best-fit solutions
- Finalize technical solution design and architecture
- Leading Technical Development Project
- Planning Go Live/Technology Roll-outs
- Nurturing a culture of Design Thinking and Innovation to design software products and solutions with enhanced user experience and design
For Business People:
Product Development means Product Growth, ROI, Market Impact, Customer Loyalty and Customer Experience, etc.
- Exploring market to discover new business ventures and opportunities for generating new revenue streams
- Developing new product programs for the launch of new products, backed by Cost-Benefit Analysis (CBA) and growth projections
- Developing and executing strategies for Customer Acquisition across all digital channels and products
- Building new Business Alliances create new fee/commission-based income streams
- Developing and executing Cross-Sell/Up-Sell strategies
- Conducting UATs of new digital products in line with business expectations
- Developing and executing Product Branding strategy
- Developing and executing Go to market/launch strategy
- Evaluating Customer Experience and taking measures to remove Frictions
Brett King is an Australian futurist, author, and co-founder and CEO of Moven, a New York-based mobile banking startup. He is regarded as an influencer in financial services globally, and his book Bank 4.0 is a thought-provoking assessment of both the current state of banking globally as well as the possible futures.
In Bank 4.0, he discusses two approaches to innovation, Design by Analogy and First Principles. Brett says, “Design by analogy works on the philosophy that as engineering capabilities and knowledge improve, engineers find better ways to iterate on a base design, perhaps finding technical solutions to previous limitations. But design by analogy creates limitations in engineering thinking because you’re starting with a template—the work is derivative. To create something truly revolutionary you have to be prepared to start from scratch.”
He further elaborates his point, “Unlike design-by-analogy or derivative design, first principles take problems back to the constitute components, right back to the physics of the design—what the design was intended to do.”
And to start from scratch, you have to be an expert on the fundamentals of any specific engineering field and software engineering is not an exception. This is the only way to nurture a culture of innovation effectively and maintain a high quality in the delivery of digital banking services.
Aamir M. Butt is an innovative leader in digital banking. He has developed a keen understanding of designing digital banking products with customer-centric user experience by adopting new generation technologies. He has extensive experience of 17 years in demonstrating leadership and performance-oriented management style in digital banking, technology, digital transformation, and digital product development.
