For all of the technical challenges in digitally transforming (DX) financial services, it turns out that human beings are the most formidable puzzle piece of all. That’s because, if you dig deep enough into digital maturity — the end game of transformation — you realize that achieving it requires a radical, almost antithetical shift in the way banks and financial institutions (FIs) have thought about and measured their businesses for hundreds of years.
A quick look at a DX playbook and you realize that these organizations have to turn their most basic precepts of investment, control, clients and product upside down.
As a former banker, I get it. I understand the long-held beliefs and convictions that have dominated banking, and by extension its discussions about technology, for decades. “Of course, we’re risk-averse and controlling! Who wants a banker that experiments and externalizes operations?”
Well, as it turns out, the world does.
The Inclination to Reject
As Bain & Company’s Mike Baxter and Richard Fleming wrote in American Banker (2015), “The traditional banking mindset and metrics rejects digital initiatives for all sorts of reasons.” As such, they argued, they fail to receive sufficient funding, attention, and support. Among the reasons are an over-emphasis on net present value and insisting on hard ROI figures over more strategic indicators like, “Does this initiative solve a key problem or strategically put us in a better, more differentiated position? Is it more customer-centric?”
If you think these conversations are problematic in the U.S. and Europe where banks might have been more inclined to incentivize new ways of thinking amid years of slowing revenue growth, imagine in Latin America where banks have enjoyed some of the highest returns on equity in the world and major enterprise technology trends lag by about four to eight years.
The takeaway is that without a fundamental change in our thinking, the best initiatives can be stopped before they start, or pass us by.