by Olivier Grandjean
Digital transformation is broad, complex and full of risk. The impact on customer interactions and the variety of technologies available require clear guidelines and specific financing. Quantitative frameworks are rare in wealth management environment making it difficult to quantify success. Olivier Grandjean delves into what makes an effective digital programme.
Digital technologies unlock direct and comprehensive benefits. Applying digitised processes and automated decisioning drives efficiency: whether it be by lowering the cost-to-serve or uncovering markets with untapped revenue growth. The secret to digital transformation is understanding the indirect benefits of improving the customer experience.
In retail banking, a Net Adoption Score* monitors customer satisfaction and the adoption of digital-only channels. The challenge for wealth management firms comes from trying to quantify digital adoption. Many employ a hybrid model, where the client finds value in continuing to use traditional channels such as face-to-face meetings or hospitality along with a digital channel. Therefore, digital success cannot be demonstrated by ‘100% adoption’ of digital platforms.
Lean user experience, multi-channel propositions, tailored products and social interactions continue to drive digital adoption of customers, advisors and other employees. However, these concepts need to be redefined across global processes, products and business lines.
Heading all business lines and business strategy, the C-Suite is theoretically best positioned to define digital transformation guidelines for wealth managers. However, they face a double challenge when translating the strategy into an actionable digital vision:
A sound digital transformation framework must provide tangible results, covering the whole organisation without focusing on the nature of the technology used.
But what elements provide the decision criteria to pilot digital transformation at business line level?
Digitalisation driven by customer benefits dictate that technology opportunities must be defined by their business outcomes. These outcomes originate from the C-level’s vision and whilst there are endless technology solutions, the end goal is categorised into four primary responses –
– Innovation: By designing innovative customer experiences, unique to the market, wealth managers can differentiate themselves or access new client segments. This approach leverages and integrates new technologies and wider market fintech solutions into a renewed and unified digital first offering.
– Adopt Proven Solution: Inhouse innovation and customer experience design are costly for a wealth manager. Adopting, copying or connecting proven digital solutions are key to supporting non-strategic offerings. This can improve the customer experience at low risk and limited cost. Adoption also leverages different levels of IT or process outsourcing to further reduce operational cost.
– Intelligent Automation: Leveraging intelligent or robotic process automation (RPA) streamlines multi-user front-to-back interactions by connecting touchpoints. Robots act as connectors and translators from one system to the other, formatting the necessary data structures along straight through processes.
– Personalisation: By accessing a wider financial picture of the individual, the whole customer experience is personalised, allowing for better cross-selling and increased prospect attraction. Digital marketing and social media interactions, customer behaviour analytics, natural language processing and machine learning algorithms all help the customer life journey and design bespoke sales plan.
“Digital transformation is not driven by IT, Business or fintech partners”
Digital transformation must start with a digital vision. This should be defined and communicated from the top down as it is integral to the long-term future of the firm’s success and ultimately its survival in today’s disruptive environment.
Digital transformation needs to take a holistic look at the company’s ambitions and balance them with continued traditional revenue generators. A digital vision facilitates business model transformation and synchronises with other central optimisation or sourcing initiatives.
Successful digital transformation requires a change of culture where a business vision translates into an actionable digital vision. This then drives transformation and formulates business impact.
“It is not only about where I want to go but how to make it happen.”
Orbium’s unique digital transformation approach
Orbium has created an approach customised for the wealth management industry to help executives document an actionable digital vision, providing decision criteria for the wider bank transformation governance. A unique and central aspect of our approach is the refinement of the digital vision into six essential elements of a successful digital strategy:
In combination with our wealth management business process assessment framework, the digital vision is critical to triggering and piloting successful transformation. The framework provides guidelines for innovation and helps manage the change portfolios. On the ground in our experience, such cross-functional process documentation and dependencies are often missed. Business line drivers often desynchronise the effort and the number of standalone digital projects in the organisation multiply, diluting the expected return.
For these reasons, the digital vision as outlined below sits at the forefront of Orbium’s digital transformation methodology and becomes the decisioning framework for the digital programme.
1. Isolate the Value Proposition Starting by identifying the unique offerings that would best justify the required investment in innovation and personalisation technologies. The vision must focus on the overall personas or roles interacting directly or indirectly in the digital model. We often see digital projects prioritised because of their low complexity however, without central coordination they focus on a single user perspective, leading to poor return and missed opportunities. Designing a compelling, yet unified digital value proposition, requires clear governance and a subtle mix of the four digital responses:
– Design new innovative offerings, maximising innovation and personalisation in both the value and the way the value is delivered. Given that offerings are digital and more customer-centric by nature, the key to stimulating an organisations vision is to selectively adopt fintech, regtech and digital disruptors. These disruptors are the fuel to drive digital innovation even if their integration needs careful consideration to ensure the maximal outcomes.
– Integrate strong partner offerings for areas of the organisation that require utility services as support or to complement the value proposition (e.g. digital signature solution, financial planning solutions, etc.) Relying on partner solutions already adopted by the required digital users is a proven strategy in the industry. These offerings however, must be well integrated into existing digital user journeys to ensure an increase in existing customer revenue streams while augmenting the data to gather better customer insight.
– Optimising support functions in term of IT, data and processes, via specific intelligent automation or differing levels of outsourcing.
2. Identify digital personas and non-digital users: focusing on users and roles often lead to multiple programmes being run in parallel for very similar wealth management users and segments. In well-designed digital programmes, the definition of digital personas originates from their interaction with the value proposition being digitalised.
3. Lean design or user journey design relates to personas in providing quantitative and qualitative guidelines for journey design of the digital proposition (e.g. maximum number of steps between 2 value propositions, what information symmetry should be respected for cross-recommendation and digital contagion, who is the leading persona in case of design conflicts on multi-user journeys, etc).
4. Channel Delivery: Digital channel priorities and multi-channel management are key to enabling lean and seamless experiences and are essential to building trust among digital users. Most Wealth Managers do not have the skill set nor the market access to justify innovation and compete against native digital front-end solutions. In wealth management, adoption of an existing digital banking platform readily solves constraints such as graphical User Interface design (UI) or User eXperience design (UX), storage flexibility, digital change delivery frequency, cybersecurity and common data statistics and learning algorithms.
5. Other Offerings: Digital personas identified in the value proposition also require utility services to fully cover their needs (e.g. specific reporting and benchmarking for discretionary mandates, international or local payment solutions, card or cheques services, etc.). To further strengthen the new vision and culture and to avoid dilution of the digital efforts in the organisation, these other offerings must have a dedicated strategy aligned with lean design principles.
6. Cultural change: The digital vision can be projected among the organisation’s business lines, products and services to document the required transformation approaches at any level. It becomes the driver for the digital programme and must be emphasised as the new organisational culture and decision-making framework.
There are no plug and play success models available to start. When the long-term digital vision is taken as decision framework of the change portfolio, projects will naturally emerge. A few tactical shorter-term projects may be required at business line level, perhaps to support optimisation of certain processes or to respond to competitive pressures. However, the core of the strategy will continue to be driven by the digital vision.
Despite the complexity of digital transformation and the challenge in measuring success, we have shown that it is possible to use a business vision and technology outcomes to create a digital vision, closing the gaps between business and technology and more importantly between strategy and business line flexibility.
A sound digital vision helps create a digital culture across the organisation by providing explicit decision criteria across the organisation, individual business lines, users and customers. In the transformation journey, the vision helps identify operating model constraints and then assesses the required changes to the traditional operating model. We argue that this is the best way to activate a holistic and coordinated change portfolio leading to the envisioned target digital operating model and the desired outcomes for the organisation.
The key challenges of the C-Suite can be resolved by focusing on a differentiated value proposition, a sound technology-based approach, appropriate use of digital personas, lean design principles, a robust channel strategy and selected commodity services, all embedded in an explicit digital culture. This new culture along with the digital vision represents the components of a successful digital programme which can in turn deliver the required business impact and correctly steer IT transformations.
*NAS – Net Adoption Score in the digital context describes the number of customers giving up traditional channels to focus on digital delivery models.