Ecosystems not vertical integration, high value exchange not owned assets, and scale with speed not return on assets will form the bedrock of success in the age of the platform business. This massive shift from a pipeline business model to a platform business model combined with digital disruption by new technologies is transforming banking, not just in the way banks maximize customer value, but also in the way they operate and run. The challenge before banking organizations is thus to ensure their employees recognize the shift, relate to the bank’s renewed vision and appreciate the bearing it may have on their role in the bigger scheme of things. Banks must not only acknowledge the fear of change, and support employees through it, but also help employees constantly unlearn and relearn for the new banking universe. In 2018, organization transformation for a culture that embraces change, innovation, customer-centricity, and lifelong learning will be a top priority for banks.
In 2017, we stated that banks in the digital age would do well to transform their culture to one that is in total alignment with the customer. One year on, the importance of this cannot be stressed enough. At the heart of this customer centric organization are multidisciplinary teams that cut across functional silos. These comprise designers and product evangelists who can empathize with customer needs and design products around it, data scientists who can glean business insights from vast structured & unstructured datasets, and AI experts who can build machine learning algorithms for improved success rate in customer service. Progressive banks are instituting programs to train their employees to view customer journeys, to enable them to see realities differently, and to help them connect the dots for creative solutions to deliver value to their customers as well as the end consumer.
In a culture where continuous learning is a way of life, to upskill and cross-skill their employees, banks are discarding the traditional class-room training programs in favor of unconventional ways. For example, DBS Singapore hires people with the required skills and capabilities and pairs top performers with the new hires to quickly multiply these capabilities across the organization. Axis Bank in India has launched Axis Bank Academies partnering with renowned institutes like INSEAD, CRISIL, ISOFE, encouraging its employees to identify areas of specialization that will help them become future ready as digital bankers. In 2018, banks will also look to train employees on relevant analytical skills to fill the gap between business and technology. Data and insights for every employee to facilitate informed decisions will form the foundation of a truly data-driven bank.
Banks have traditionally been known to avoid risks, but to keep up with the pace of innovation in the age of open APIs, platforms and ‘digital’, banks must move from a risk averse culture to one that values innovation and collaboration. This is a culture that supports experimentation wholeheartedly and rewards not only success but also failure. The intrapreneurial culture of DBS is a case in point. With hackathons to encourage greater collaboration with start-ups, digital skilling programs, and workshops for human centered design and agile methodology, the bank is building a digital mindset amongst its employees and is building a culture to enable every employee to contribute to digital innovation without the fear of failure. The bank also has an incubation program for employee start-ups. In our interaction with banks, we are increasingly witnessing a move towards Agile and Dev-Ops for greater alignment and collaboration between development and operations, shorter sprints and constant feedback loop in an IT development cycle. Banks are going one step further to elevate Agile from an IT practice to a corporate process for enhanced cultural agility.
Lastly, in 2018 banks will revisit their KPIs to instill the new culture of learning, collaboration and innovation. There will be an increased emphasis on non-monetary factors such as customer experience, digital trust and innovation. With a yardstick to keep at it, and coupling it with rewards and remuneration, banks can successfully bridge the gap between technology and business readiness for the new world or re-imagined banking.
Banking organization of the future will be very different from what it has traditionally been. Progressive banks want to operate like the leading platform companies and digital organizations of the world that thrive on diverse ecosystems. To that end, banks will increasingly diversify their human capital, adopt cross-industry processes and transform into cross-cultural organizations. 2018 marks the beginning of this transformative trend.