Knowledge Center: Publication
Winning with digital: Lessons from financial servicesSubscribe to Financial Services 4/18/2017 Ryan Bulkoski, Todd Taylor, John Rolander, Anish Shah and Srini Venkateswaran
The race is on among large financial institutions to gain a competitive edge through the application of digital technology—including mobile, social media, analytics, and the cloud. An increasingly large and demanding group of customers is watching, energized by the promise of immediate access from any technology platform, frictionless transactions, and comprehensive service and support.
How are financial institutions faring? To find out, Marakon and Heidrick & Struggles recently surveyed the chief digital officers (CDOs) of 10 financial institutions that together cover about 80% of US households, conducting in-depth interviews with 7 of these executives. We also drew on our extensive experience serving industry leaders. We wanted to learn how they are meeting the challenges of digital in four areas that are critical to success.
1. Strategic intent: Are there clear linkages between digital initiatives and corporate strategy? We found that investments in digital are generally happening in isolation and not well linked to strategy—or to economic value—thus limiting digital investments to incremental (if any) gains. In addition to creating a clear linkage, financial institutions must hold digital investments to a tight standard; overcome legacy business models, systems, and processes; and learn not to shy away from creative solutions for meeting regulatory requirements.
2. Digital organization: Is the effort to go digital built on a well-defined corporate structure and culture for digital teams? For financial institutions, hiring the best digital talent is no simple feat. People equally fluent in business and technology are in short supply, and the competition for them is fierce. Many financial institutions would do well to take cues from start-ups by making talent feel their work is meaningful and innovative, adopting aspects of a start-up culture (such as norms of dress, workplace mobility, and office space), and becoming comfortable with self-disruption.
3. Delivery approach: How are emerging and legacy in-house technologies integrated—and what external partnerships can generate innovation and growth? The survey revealed that incumbent financial institutions are struggling to keep up with their nimbler fintech counterparts. To match the competition, banks must implement agile practices, develop incentives for risk taking, favor a comprehensive rethinking of existing products and services, and carefully manage vendor partnerships.
4. Capabilities: Does the institution have the necessary infrastructure to deliver a superior client experience? Although banks have poured resources into developing a complete view of their customers across platforms and services, few have succeeded. We found many financial institutions would benefit from a ground-up redesign of capabilities—including, crucially, in the back office. They must empower digital teams with end-to-end responsibilities, add front-end and back-office functionality, and use their data to develop a 360-degree view of each customer.
These changes are easier said than done. In this report, we break down where and why many financial institutions are lagging behind and examine the leaders that are transforming themselves into truly digital institutions.
For the full report, Winning with Digital in Consumer Financial Services: Lessons from Leaders and Laggards, click the download link above.
About the authors
Ryan Bulkoski (email@example.com) is a partner in Heidrick & Struggles’ San Francisco office and a member of the Big Data & Analytics Practice.
John Rolander (firstname.lastname@example.org) is a vice president in Marakon’s New York office.
Anish Shah (email@example.com) is a principal in Marakon’s New York office.
Todd Taylor (firstname.lastname@example.org) is a partner in Heidrick & Struggles’ New York office; he leads the Financial Services Practice's Wealth Management and Financial Technology sectors in the Americas.
Srini Venkateswaran (email@example.com) is a vice president in Marakon’s New York office.
The authors wish to thank Seth Nelson, Seth Shapiro, David Wang, and Riley Whately for their contributions to this report.