Will a Digital Culture Change the Banks?
By Guillermo Kopp, Worldwide Financial Services Industry Director, Microsoft on March 20, 2017
Filed under Financial Services - Banking & Capital Markets
How to epitomize the banking culture? A way to illustrate it may go back to my start at Citibank, many moons ago… The welcome kit included from-the-desk notes and my bronze nameplate in capital letters.
In ancient Rome, Cicero quipped: “O tempora, o mores” (Oh, what times! Oh, what customs!) Despite many a crisis, banks have managed to stay in business for the past 500 years and built a strong credit culture. Occasionally, people or companies needed housing, equipment, or trade finance, so they begged their banker for credit. The physical world moved slowly, and banks took time to grant credit requests.
How will bank credit unfold in a digital world? As people and businesses transact digitally and trade digital goods, the boundary between physical and digital will blur further. A fast-paced digital economy will step up the demand for credit, both in terms of frequency and time to approve and disburse. Banks may wonder if traditional credit policies, processes, and functional roles could remain as core competencies.
The extension of credit as well as many banking tasks must accelerate. For example, the creation of new products or technology services. Banking skills and procedures must evolve too! The digital fabric will bring cultural shifts. Would a magic formula or digital banking toolkit drive the necessary changes?
Digital banking will transform disparate products into personalized customer bundles. Banking functions will coalesce into tailored financial services capable of fulfilling customer lifestyle needs right on the spot.
How will banks effect cultural change? To vanquish fragmentation throughout lines of business, products, and territories, bank organizations should become more agile and somewhat unstructured. And embrace a growth mindset pivoting on customer centricity, experimentation and learning: Encourage bankers, product specialists, and service personnel to team up dynamically. Line of business sponsors that lead by example and empower champions of digital change will be instrumental in evolving the culture.
How might banks overcome the passive resistance from middle ranks and traditional workers who may resent a digital agenda? To weed out obstruction, bring out the power of collaboration. Promote a highly productive digital workplace. Blend in progressive thinking by encouraging diversity, external hires, and job rotation. Continual reinforcement should help everybody live and breathe a digital culture.
Across disperse bank organizations, communications will influence change by connecting the leadership agenda and vision directly with all employees. Two-way flows should provide such connections: Live video broadcasts (and clips) with input from enterprise social networks and instant feedback. Creative process, product, and technology hackathons should also help in fostering a learning organization.
What about measuring digital prowess? For manufacturing processes, Dr. W. Edwards Deming had highlighted the difference between random variance and special causes. Managerial attempts to steer employees to yield perfect quality could not remove random variations stemming from natural, periodic, or external factors. Additionally, with rapid digital change, the meaning and substance of what gets measured will challenge the business-as-usual indicators. To succeed in a disruptive digital world, banks should first mind how innovation works. As bank teams and workgroups ideate and adapt collaboratively, they will quickly discover how to gauge and advance discrete dimensions of change within their control.