Some years ago, I was interviewing a CFO for an article. He cut an impressive figure – the senior exec of a financial services company at a young age and highly articulate. The interview was good, insightful and helpful. We covered the usual ground, then he floored me with a statement that to him was old-hat, “In financial services, all products are creations of IT.”
The statement was powerful. His point: that what financial services companies produce – new types of accounts, methods to mitigate financial risk, trading platforms and the host of other products – are just “manipulations” of bits and bytes. Both production and consumption in FinServ is a product of technology.
This notion explained immediately why finserv companies were leading buyers of technology and why they had such specific “rules” about the use of technology in general. Some of these rigidities stem from external factors like regulation, while others connect to internal imperatives. When the business is bits and bytes, it behooves an organization to think of them as the core asset. Modern financial services (and the new branding “FinTech”) has converged into a singularity with IT.
So, when about five years ago, digital transformation emerged as the theme-of-the-times, I began to wonder what it would mean for already tech-drenched financial services. Years and hundreds of discussions later, I have come to the view that digital transformation in finserv has 4 main pillars:
- Creating a culture of transformation in which all ideas are subject to scrutiny, especially when digital-native companies are challenging the status quo.
- Digitizing and improving the customer experience and connecting the dots for the customers that want the dots connected.
- Developing the habit of speed and scale in all aspects of operations.
- Creating secure and speedy digital processes to orchestrate all aspects of the business.
While these appear to be generic, context and experience take these the last mile.
As I saw these themes emerge, I asked myself some tough questions- “Is this all marketing hyperbole?”, “Is this a process that can ever be successful?”, and “Where does an organization start?”
Of course, there is a dose of marketing here. If the idea of marketing is to make complex processes and products understandable and palatable to vast swaths of people, then surely marketing is a factor. Can this be successful? Absolutely – progress is success and every-time you delight a customer along the way, you can take a victory lap.
The last question is the hardest of all. How do we identify where to start, what the launching point of the digital transformation journey is and what it should be? I’m convinced that all organizations must start with their innards – which is to say, their ERP plans. Premature declarations of digital transformation and of great digital experiences are hasty unless the organization’s house is in order. Charity begins at home and so does digital transformation.
I’ve seen too many organizations overheat with excitement without fixing what matters first just as I’ve seen too many non-crucial parts of the business be foregrounded in the process of digital transformation. Start with ERP- that’s the clarion call.
The inside-out method of digital transformation will serve financial services well.
This column does not necessarily reflect the opinion of FinLedger’s editorial department and its owners.
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Romi Mahajan at email@example.com
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