Helping CIOs Close Skills Gaps Amid Digital Transformation in Financial ServicesHelping CIOs Close Skills Gaps Amid Digital Transformation in Financial Services
Here are four key dimensions that need to be addressed to build organizational digital capabilities, providing a solid foundation for long-term readiness and innovation.
October 18, 2022
Technology has always been a driver of change in large financial services firms, but this has significantly accelerated in the last five years. The disruption of small innovative fintech firms, large tech companies like Amazon and Google providing new technology platforms and services, and heightened customer expectations as technology enables new digital interactions in all aspects of lives, are all driving trends here to stay. Organizations, IT leaders, and CIOs are managing a proliferation of data that is only growing and is directly impacting CIOs.
Global digital transformation investments are expected to reach US$1.8 trillion in 2022, and financial institutions are under immense pressure to digitally transform so they can successfully navigate increasing economic uncertainty and ongoing post-pandemic challenges. This is putting CIOs and IT leaders to the test to drive change and prove ROI -- and this requires a comprehensive approach. The strategic adoption of digital technologies to improve processes to deliver better customer experience, at reduced costs, requires significant transformation, from technical strategy and new processes to massive cultural changes in mindsets and approach. Here, we address four key dimensions that need to be addressed to build organizational digital capabilities, providing a solid foundation for long-term readiness and innovation.
1. Start with digital vision & strategic intent
Change starts with a vision: What can my business become? How do we interact with our customers and suppliers, and how do we do things differently? How does the possibility of digital transformation intersect with the realities of our business to optimize customer experience, use data to feed insights, and better meet customer needs?
Data is the driving force of a digital business, enabling an organization to predict trends, discover new market opportunities, and develop new products and services. The challenge is that the amount of data stored and saved is growing exponentially year over year. Therefore, “thinking digital” touches all aspects of how data is captured, stored, analyzed, and turned into insight to drive business impact. Companies like Apple and Amazon have mastered the art of gathering data, understanding their customers, and driving accelerated growth -- and this is a model enterprises must use going forward, tailored to their unique strategic goals.
Forward-thinking leaders must also consider how new data-oriented priorities impact human capital. With increased data, employee roles will shift, as business model and capability requirements evolve. Getting the right human capital with the appropriate skills to manage this end-to-end process will become a critical priority for businesses. Handling, storing, processing, and driving insights and analysis from sensitive data presents a number of challenges for financial institutions: In order to have the proper data capabilities needed to compete and innovate, an organization must have the proper data scientists, cloud developers, and cybersecurity professionals on their team. As organizations continue to improve monetizing data practices and evolving their products and services, addressing these skills and competency requirements will be what separates innovative organizations from the ones of the past.
2. Build digital process and technical capabilities
Building a digital-first infrastructure and understanding among users starts with enabling low touch customer journeys, identifying weak or friction points in your current service platforms, enabling omnichannel customer experiences, providing personalization in products and services, and being adaptable and agile to implement these changes quickly.
The digital transformation journey must, therefore, address the following in in a synchronized, systematic, integrated manner:
Customer touchpoints – front-end client UX
Customer channels and customer services models
Agile development processes and methodology
Back-end infrastructure, cloud, or on-premises technology
To successfully build these organizational capabilities, specific skill sets are needed, such as developing an omnichannel customer experience, gathering and storing data that is collected from channels, and turning that into customer intelligence. Being able to complete these tasks in a cloud environment with bringing together disparate data can be challenging, but these are important steps that will help direct future priorities for the business. To achieve this, IT leaders will likely need to upskill their current personnel, or hire new talent with data management and data science/analytics capabilities, as well as technologists that can build the data platforms in cloud environments.
3. Drive internal organizational change and cultural shift
Driving from strategy to execution starts with a shift in internal mindset: how do we get people to think, do, and become more digitally focused? Changing how people think about their work and how they interact both internally and with their customers requires change at all levels of the enterprise. The C-suite needs to be the leaders of the transformation and orchestrate the various levers to drive a change in culture. The levers can include the following:
Sharing the digital vision of what we can become
Creating shared norms/driving new behaviors
Incenting new behavior with rewards -- supporting changes in customer interactions and internal processes
Providing employees with new opportunities to learn digital skills and recognizing progress
Addressing talent and skills shortfalls and addressing the digital talent capability gap must be driven top-down, but also must include incentives that drive bottom-up behavior and motivational changes. Leadership should plan for all aspects of this transformation: hiring, reskilling, incentivizing, and rewarding the development of new behaviors and capabilities.
4. Develop a digital transformation roadmap
Given the complex nature of this journey and the need to develop differentiating capabilities, developing a long-term plan is critical to guiding complex but interdependent change efforts. The transformation plan for organizations must both build required capabilities and address the organization and cultural change aspects that are critical to success. The plan must also include activities to get people on-board with the digital transformation agenda and include the right measures to recognize progress on the way but also to drive accountability.
These organization-wide transformations are challenging. In fact, according to McKinsey, only 31% of transformations succeed, mostly because these elements are not planned in advance or executed without a realistic year-over-year transformation roadmap. Firms often try to take on too much; a thoughtful, holistic approach is required to ensure you can address all the elements highlighted in above in synch to achieve a successful transformation. As technology is always evolving, becoming digital is not an end game, but an ongoing, incremental continuous improvement program -- and your talent program should reflect that.
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