Is your firm prepared to foster a digital culture?

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Digital transformation is affecting every aspect of financial services – from front end to back end.

Each firm’s corporate culture must reflect the speed and agility of digitalization to remain competitive and continue attracting the best talent.

So, how are financial services firms becoming digitally ready?

A recent Capgemini report found that successful transformational organizations prioritized the following seven digital culture dimensions:[1]

  1. Customer centricity
  2. Innovation
  3. Data-driven decision making
  4. Collaboration
  5. Open culture
  6. Digital-first mindset
  7. Agility and flexibility

Although a complete mindset overhaul across all dimensions may be rare, firms that become frontrunners in at least some dimensions are most poised to make consistent progress among the remaining attributes.

While banking and insurance firms are making good progress when it comes to customer centricity and collaboration (approximately 50% each), they lag on other attributes, especially innovation, where only 26% of firms cited a high prevalence of innovation within their culture, during a recent survey.

% of Banking / Insurance firms with prevalent digital culture dimensions

% of Banking / Insurance firms with prevalent digital culture dimensions

Factors limiting firms’ digital readiness

Lack of innovation remains problematic across organizations, with only a third of survey respondents saying their banking/insurance firm is investing in the digital capabilities of employees in areas such as analytics, mobile, social, and cloud. Also revealing was the fact that only a third of survey participants said they do not have to deal with bureaucracy when submitting ideas. The takeaway? Two-thirds of firm staff may face bureaucratic gates that hamper free-flowing ideas and innovation.

The majority of banking/insurance organizations do not have a digital-first mindset, with only 38% of respondents saying their firm takes advantage of digital solutions (wherever possible), and a dwindling 31% saying that digital is an integral part of their organization’s DNA. Fewer than two-fifths of the organizations leverage analytics to identify new opportunities as well as to make decisions based on data and analytics, which affects their ability to harness the power of analytics to improve operational efficiency fully. Only one in three organizations in banking/insurance are agile and flexible enough to empower employees, and a meager 4% of respondents said they could test, learn, and deploy new products quickly – implying a lack of the firm’s agility.

Effective collaboration merits assessment, too, as fewer than half of respondents said their organization embraces teamwork and idea exchange across departments and functions. Without a healthy collaborative organizational mindset, firms seriously risk the prospect of failed digital innovation and falling behind competitors. Customer centricity is a significant priority for banks and insurers, as a majority of firms (over 60%) use digital technologies to personalize user experience, increase customer reach, deliver positive customer experience across channels, and develop new products and services.

Keys to success

Financial organizations impacted by legacy systems, organizational silos, and higher costs of operation have had limited success in digital innovation through in-house efforts. So, it is not surprising that collaborating (both internally and externally) is the need of the hour. There are significant barriers to innovation and leveraging the right partners is key to achieving digital readiness. Surprisingly, fewer than one in three banking/insurance organizations work with a partner ecosystem, and only 18% reported having access to a broad ecosystem and co-developing solutions with partners.

% of Banking/Insurance firms that agree to the following statements on openness

% of Banking/Insurance firms that agree to the following statements on openness

Also, Capgemini’s World Insurance Report (WIR) 2018 argues that a fully digitalized and integrated ecosystem that is adaptive to real-time information, generates real-time and actionable insights, and supports informed and quick decision making is critical for building future-ready operating models. As they face digital disruption and a highly competitive environment, financial firms need to view their interactions with customers as embedded in an exchange economy, where both firms and customers seek to extract maximum value. Embracing a digital mindset is the key to enhancing customer experience and creating opportunities across the value chain.

To continue this discussion, feel free to reach out to me via my profile or on social media.

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[1] Capgemini’s Digital Transformation Institute, “The Digital Culture Challenge: Closing the Employee-Leadership Gap,” June 8, 2017, https://www.capgemini.com/consulting/resources/the-digital-culture-challenge

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