The Biggest Challenges Facing Financial Services – Part IV

September 4, 2018

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A four part series originally published LinkedIn.

Part IV: Don’t Complicate What Others Have Made Simple

In Part III of our series, we covered how our industry’s apprehensiveness with experimentation and failure and our longstanding fixation with seeing our businesses through a lens of distinct, fully-owned and operated product lines impedes our ability to make the changes necessary to digitally transform.

This also has the added effect of complicating the simple. I’m referring to the requisite decision-making and authority needed to meaningfully transform which, if hampered by product and area centric governance, becomes less clear, more committee-like, and stifling to new partners. And yes, frustratingly slow.

What’s required instead is a more streamlined approach that, for example, pairs new collaborators with strong internal sponsors who can usher them through critical phases of innovation. The alternative is to stifle partners (and doom projects) through a series of unending objections, exceptions, foot-dragging, and stonewalling.

In addition, many of us tasked with transforming our organizations lack sufficient experience and training to understand best practices in key areas like relationship management and platform banking to, for example, avoid unnecessarily complicating technical decisions that have already been made simple for us by innovative collaborators.

This scenario is perhaps most evident in the process of introducing White-Label banking platforms, which by design have the built-in flexibility to accommodate many different collaborator roles and use cases. However, this flexibility can have a downside. You see, if banks, FIs try to apply these modern digital assets with an own-and-control mindset, arbitrarily carving out an increasingly bigger role for themselves, they can easily nullify a lot of the innovation, simplicity, agility, and savings they had to gain at the start.

Iteration, Iteration, Iteration

If the three most important things in real estate are location, location, location, then the same can be said of iteration’s importance to digital transformation. As I often advise partners: don’t get overwhelmed. Start small. Find a project you like that employs APIs and open banking platforms — the new ways of doing things. Give yourself and your people the hands-on opportunity to learn new flows, and where you might need to invest in people and processes. Who knows, maybe even dazzle a few clients along the way!

OK, ‘but where do you start?’ you ask. As Deloitte advises, “Corporate banking groups should ramp up their digitization efforts, especially in businesses that still heavily rely on manual, paper-based activities.” In Latin America, the B2B and retail space offer a wide and green-field on which to test this thesis, new mindsets and to assemble key collaborators.

In conclusion, banks and FIs need to dispense with the idea that successful transformation is compatible with legacy organizational structures and ways of thinking about clients. They and other key players need to come to terms with the reality that the ability to decree how and when clients will be served is quickly fading and with it long-held beliefs about technology, investment, ownership, control, and product.

That may sound like a bold statement to some, I know. But, I firmly believe we’ll solve the digital transformation puzzle faster and more easily if we have the grace and courage to help ourselves and our collaborators understand when we may be looking at the picture through the wrong lenses.

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