Three ways banks can kick-start the Continuum

Posted on: Mar 23, 2018 by Koen Pelgrims

The Atos whitepaper, ‘The Digital Business Continuum: Enabling organizations to thrive amidst disruption’, got me thinking about the nature of change in banks. It explains why enterprises must continually transform to stay relevant.It’s fair to say that banks are used to a state of ongoing adaptation. First, there was the high street branch. Since then we have seen ATMs, phone banking, contact centers, internet banking, and mobile banking. Soon, there will be virtual assistants too. Yet, this change has been gradual and driven in large part by technological developments.

Today, the pace of change has intensified. And it is not all to do with technology. Yes, technology is one foundation for industry transformation. But another is the customer.

As customers, we demand convenience, speed and seamless service. (I like the convenience of ordering a taxi on my phone and having the money come out of my account while a receipt is added to my expenses app.) We don’t think in silos.

But whilst banks crave platform-based architectures to offer customers this new style of service, they are actually saddled with technology silos. That is because the linear changes highlighted above saw technologies simply layered on top of each other.

This stack made the ‘universal banking model’ possible. But it’s also incredibly difficult to break apart now that new business models and competitors are emerging. FinTechs have looked at the complexity of big banks and said, “No thanks”. They have started with a blank slate and built businesses on platforms. They are also replacing these platforms regularly (in some cases every three years) as soon as they need to move on.

This is the Digital Business Continuum in full effect.

But let’s be clear here. The Digital Business Continuum is not focused on these emerging organizations. It is focused on digital transformation in huge organizations.

As I read the Atos whitepaper, it reminded me of an interesting piece on Chris Skinner’s blog. It covers four potential business models that large banks could adopt. In the author’s view, one of the most successful will be “to combine open distribution with the provision of a few strategic services sitting on top of a vertically integrated infrastructure”. In other words, brand what you do best and drop what you don’t need to do, while building an open network with other providers. All so you can serve your customers better.

So what does the Atos whitepaper teach us about achieving this?

The first is resource allocation. Typically, banks are relatively static organizations that keep resources and structures in place for lengthy periods. This makes it difficult to change by, say, moving staff from a branch to a digital role. Lloyds Banking Group in the UK and Crédit Agricole in France have announced Digital Academy-type initiatives so people become organizationally mobile. As the whitepaper points out, this is just one area of resources that needs to be addressed and changes must be pervasive.

The second area is leadership. The whitepaper highlights how change, particularly continual change, requires purpose and leadership. Banks are often run on a command and control basis, arranged by product groups and organized by channels. This has made for a complex environment in which it is difficult to shift from a product to a customer-centric customer approach.

The third area is governance. Banks have an inherent bias in respect of risk. Continual transformation demands a change in attitude towards success and failure. The whitepaper explains that “risk management” very often actually means “risk avoidance”. It also suggests that, ‘When learning from failure, the attitude should be one of “how can we do this better next time?” rather than one of “how can we avoid doing this in future?”

These are starting points and should not be seen in isolation. But they are also sure-fire ways to kick-start continual transformation so the bank—with whatever business model it decides to adopt—can thrive in a constantly changing world.

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About Koen Pelgrims

Global Market FS ISSD
As Director of Customer Experience Solutions, Koen Pelgrims is in charge of understanding the art of the possible and reorienting Atos’ portfolio accordingly. He has spent almost all of his career serving clients in Financial Services, moving back and forth between consultancy and business development. His passion is studying the advent of new business models that are founded on technology and understanding what the associated client benefits look like. Koen has a Master’s degree in Business and Engineering and lives in Belgium.