Digital transformation for wealth managers is often a hard concept to understand. When does an IT project turn out to be digital? What does a digital offering or a digital project really mean? In which aspects do digital transformation programmes differ from traditional change delivery programmes? Are we not all #DigiLost in the digital revolution? Olivier Grandjean and Katharina Mohr help provide a guiding light.
Digital transformation is the “buzz phrase” of the moment, reports an article in the UK’s Guardian newspaper. However, as the author admitted, “I’m still not sure it’s clearly understood”. That story was published in 2013. Fast-forward to the December 2018 edition of CIO magazine and one article carries the headline “What is digital transformation?” Five years separate the two pieces, but it’s clear that the concept of digital transformation remains mysterious.
Unhelpfully, it can be defined in numerous ways, which means that three companies can talk about their digital transformation projects and all have something different in mind. It’s no wonder some clients are #DigiLost.
Broadly speaking, digital transformation is not about rethinking the way a company does business, but how the value would be delivered to its customers once removing legacy technology constraints.
What is important for decision-makers is to ignore the technological buzz, previous barriers and current processes and remain focused on the new business model, its value to the organisation and how it will contribute to the company’s overall success.
A guide for the #DigiLost
Unfortunately, it’s easy to lose that focus. The C-suite gets distracted by the variety of new technologies involved, which seem to arise and then be superseded at bewildering speed, as well as by the complexity of day-to-day business interactions that need to be digitised. It’s easy to get lost amid all this complexity, focusing either on technology, on a specific business line or on single user’s needs, but it is possible to find a map.
Digital transformation represents a profound change in wealth management culture, requiring a vision for new products, optimised processes and fresh channels that the wealth manager needs to activate to remain relevant.
The obvious need to activate optimised scalable support functions in the middle and back office is often wrongly called ‘digital’. Digital is not a new word for IT change delivery. Even when digitising legacy paper-based processes, an optimisation project may not highlight any of the four factors characterising a strong digital offering and benefitting customer experience:
Four characteristics to recognise a digital project
A Lean Customer Experience – This goes beyond existing service optimisation; Clients want to be able to seamlessly shift their interactions between self-service, remote support and a final interaction with the relationship manager. Due to the variety of services proposed and required information continuity in customer interactions, the C-suite needs to dictate a list of priority digital users (including their hierarchy in accessing digital information). Other personas (such as middle office users) may benefit partially from the related digital investment but are not considered decision critical.
A Tailored Offering – Bespoke portfolio risk, sustainable or ESG investment and transparency have become key drivers of portfolio construction – overcoming previous trade-offs clients were making against their preferences – adding new constraints and complexity to scale-up investment offerings and replacing the traditional return-based asset allocation. A tailored offering delivers a personalised approach, often associated with artificial intelligence or machine-learning algorithms that may one day replace client segmentation with fully personalised services and marketing campaigns. These powerful technologies need time to self-configure and are likely to bring early benefits in fraud detection, business-process optimisation and event prediction at customer level. Re-centring the offering into the customer’s centre of interest or wider financial picture already enhances personalisation and provides the organisation with digital information undisclosed previously.
Omni-channel Digital Banking Services – Consistent offerings across existing channels, and the ability to offer new ones, are important when it comes to providing a continuous, lean and personalised client experience. This enables market differentiation for the business and a trusted digital journey for the client, which will build their confidence in interacting with the organisation more often and remotely. Omni-channel demand expands not only into the need to manage wider assets and liabilities over a consolidated financial picture. It also drives banking services outside of the banks physical or geographic universe through the acceleration towards consolidated goal based financial advisory.
A Social Presence in Life Events – Next-generation client-lifecycle management, from an instantaneous assessment of the digital offering through to closing an account, is a critical differentiator in customer experience. It is now possible to have a marketing presence in the lives of customers thanks to technology; through targeted campaigns, expert forums, peer forums or, ultimately, personal-data acquisitions – all of which provide key insights into customers’ activities and financial priorities. This allows for improved client engagement, personalised digital marketing to maximise client acquisitions, up-sells and cross-sells, as well as client retention. This area of opportunity is often overlooked by centrally governed digital initiatives, which focus only on a seamless onboarding to the investment experience and leave the wider aspects to digital disruptors.
Client demand and business vision drive digital transformation
These four dimensions also determine the business case, outcomes and benefits realisation of any digital project and uniquely differentiate it from a traditional IT project. As such, a project can be called ‘digital’ if it enhances any of these four dimensions for selected digital users or personas.
Despite being triggered by technological innovation and the revolution of connected information, digital transformation is not a technology transformation. In fact, it stems from a rapid need to adapt to pressure from clients, employees and the wider market for comprehensive and connected services.
This is great news for executives because it means they can focus on understanding the client’s needs and necessary technology outcomes, rather than technological detail. That is, after all, where their expertise lies.
Establishing the envisioned future business model through a selection of primary digital responses and digitalisation routes is key to drive a new organisation-wide culture for change and a coherent digital-transformation approach among business lines, users and customers.