Implementing a digital transformation strategy for financial services firms

Once a technological buzzword, digital transformation has morphed from a “nice to have” approach into a “must-have” in industries like finance and beyond. For financial services firms, it is directly linked to improving employee experience, exceeding customer expectations, and gaining a competitive advantage. In the context of Covid-19, adapting to new needs and demands translates to ditching legacy systems, becoming more open to transformation initiatives, and creating a resilient organization capable of accepting whatever the future may bring. 

Customer centricity at the core of all business operations 

Digital technology is deployed to craft memorable experiences, and as a consequence customer centricity lies at the core of digital transformation. For financial services companies, it is an opportunity to revamp operations and adapt to what people truly want, taking down legacy systems. As organizations are transitioning to a more agile and dynamic culture, the organizational mindset has switched from being product-centric to being more customer-centric. 

Considering that the world of finance is ruled by the multi-channel approach, going digital involves rethinking the front office, adopting self-service portals, and introducing mobile apps to ensure seamless experiences. At the same time, customer centricity is about leveraging technology across value chains, testing, and experimenting to see what best fits customer needs.

Technology enablers trump legacy systems 

Digital transformation depends on a modular, open-source infrastructure that enables organizations to benefit from advanced technological developments. This way, they will be able to create better products, new ways of collaborating with external stakeholders, and better customer engagement. The problem with financial services firms is that they must confront legacy IT systems. For change to happen, leaders in this space must modernize their IT infrastructure, and in most cases replace it altogether. 

In terms of tech stacks per se, the financial system is already paying close attention to cloud computing, AI & machine learning, APIs, digital data management, and modular architecture. Transitioning from a legacy infrastructure may not be the easiest step. But it is a fundamental one for organizations to keep up the pace with today’s digitized economy.

External partnerships pave the way to success 

Regulators, investors, partners and additional parties are all fundamental in the finance industry. For many organizations, it paves the way to exploring new opportunities, tackling challenges, and winning loyal partners. The need to partner up is more acute than ever. As the benefits offered by digitalization are strengthening, increasingly more leaders are acknowledging the importance of a fruitful collaboration with a third party. 

FinTechs have the capability to solve challenges that go beyond digitized services and mobile apps. In more than one way, they can help train employees by offering them advanced training. Onboarding investors is equally challenging as most of them are interested in gaining stable returns. To mitigate risks, a first step is to make them understand that disruptive technology is risky but also highly rewarding when strategies are properly-implemented and the best tech stacks are used to execute them.

Building a foundation ruled by champions of change 

For the majority of financial organizations, commitment is fundamental to attain digital transformation success. Leaders must acknowledge that they need a foundation made up of champions of change, as well as enabling technology that can accommodate an innovative vision. Savvy leaders know that digital transformation provides an opportunity to ditch old-fashioned approaches in favor of a pioneering business model that can scale. 

As far as innovation is concerned, a set additional of metrics is required, but also a sound grasp of new ideas such as agile development and design thinking. Financial companies must see digital transformation as a process rather than a project, at the same time realizing that a digital initiative that renders results in the long-term.

There’s no one-size-fits-all guidebook for digital transformation in finance. Banks, financial institutions, and additional parties, must focus on taking action with an emphasis on doing things the right way at the right time. Advanced technologies have their own limitations, and for that matter it pays to get people involved, test to see what works, abide by policymakers and regulations, and ultimately, build a sustainable financial ecosystem that can exceed customer expectations.

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