Digitise or fossilise
Change is woven into all nature. It is ever present. We see it in the rapidly evolving business ecology, and the increasing significance of the digital realm to banking. In this short article, I share a few opinions on the growing centrality of the digital sphere to the business of banking.
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…the state of now…
Banking innovation
Our banks need to reconsider aspects of their approaches to business before they are swept away by the changing tides of customer behaviour, competition and talent gap. Today’s bank customer is served a vast array of digital offerings by retailers, hotels, airlines, telcos and the like.
Amazon, Wal-Mart, Tesco and Argos are some of the leading names in this service. And did I hear someone say, ‘the trend is in the West and not Africa?’ Advances in technology have shrunk the world into a hamlet. For good or ill, a number of business and cultural trends in the West drift, over time, to our part of the world. Customers are extending their acquired digital appetites to what they expect of banks.
The digital platform has equipped telcos and other non-bank entities to gain a foothold in the payments space. A clear example is the Kenyan M-Pesa. Today, the mobile money offerings by telcos in Ghana are, possibly, the beginnings of further moves they will make into segments traditionally controlled by banks.
Many banks have neither groomed nor understood the need to attract the required talent to support their digital programmes.
Three reactions
In my interactions with stakeholders in the industry, I observed three responses to the current digital wave. First are the faddists who seem to say ‘this digital thing is a mere fad’. Thankfully, they are in the minority. The second category pays lip service to the agenda for digital transformation. Most of them have been groomed in the traditional regime of ‘branch network’.
They have insufficient exposure to appreciate the transforming potential of digital. Then there are those who just appreciate the pivotal role of digital to leading business performance in these times. To them, digital is the new imperative. They are the kind the banking industry needs at this time. Unfortunately, they are few.
What digital means
For many, digital means Internet banking and mobile banking. Well, it includes those, plus more, much more. Internet banking and mobile banking should not be mere accessories strapped unto a ‘brick and mortar’ mindset. Digital has implications at a philosophical level. Board Members, Executives and all Senior Leaders need to buy into the digital notion.
Evidence of their commitment should be measured by the consistency of relevant digital-supportive business decisions. These decisions should include adequate budgetary allocation, deployment of best leadership talent to the digital agenda, strong executive oversight and the sheer quality of time devoted to the cause.
Yes, quality time. Another implication of the digital is the courage to allow the digital concept to deconstruct the traditional approach to business, and reform how businesses should be managed.
This is not a cry to abandon tested disciplines like Risk Management, Regulatory Compliance and Assurance. It is a call to recognise the digital imperative, and permit it to drive the business model. Understandably, execution details will vary from business to business.
If you want to be digital
The most important requirement for driving the digital transformation agenda is leadership – visionary, liberated and strong. In this context, leadership is not about, although it may relate to, technology insight, mastery of banking operations and excellence in quantitative methodologies.
There is a high place for Regulatory Compliance, IT Security and Data Analytics. But that is beyond the scope of this paper.
The requirement is leadership: as simple as it can be, as complex as it can get. It is the discipline of exerting strong influence to successfully chart a cause lastingly.
Unfortunately, a number of key decision-makers have a mindset cast in the mould of the ‘brick and mortar’ regime.
They still think in terms of the manual shuffling of hardcopy files from one desk to the other, guided by manual controls embedded along the way. At best, they appreciate some semi-automation of the back-end to support the front line.
Often, these are characterised by persisting bloated headcount at the back-end compared to the frontline, with no significant cost-savings despite all the efforts at process improvements. Why can’t they appreciate the place of straight-through processing on a fast, secure and scalable digital platform? The answer is ‘the mindset’: ‘brick and mortar’, ‘branch network’! I am not of the ilk that calls for the abandonment of existing branches.
They have a place, even if I hold that theirs is a diminishing relevance. Mine is a call: ‘transform voluntarily to digital today, before you have to do so painfully tomorrow’.
Without radical steps to address the prevailing talent gap and lack of leadership commitment to the digital agenda, our industry will lag global performance.
Going forward, the banks that will survive will be those that have recognised digital as the new imperative. Those who say digital is coming are wrong. Digital is here. Now is digital time. Our customers are adapting to it at a fast pace. We should also do so, but at a faster pace. Digitise or fossilise:
‘He who has an ear
Let him hear’
All around nature
I see it abound
Change – it’s what I found
Driving the future
The writer is a banker with significant leadership experience spanning two banks, two continents and a number of countries. He is currently Head of Consumer Operations, Barclays Bank of Ghana. He has a strong background in engineering, risk management, operations, training, coaching and leadership.