As part of the , the Lhoft welcomed Nick Ogden, a pioneer and serial entrepreneur in banking and payments. on the impact of Covid-19 on digitalisation: “People around the world have been exposed to digital technology at a rate and a depth that wouldn’t have happened otherwise. By 2030, without the pandemic, we might have reached the level where we are today.” While Covid-19 is accelerating digital transformation of society and corporations, adopting a programme of digital transformation remains challenging. What are the main components of successful digital transformation? (I). What role does Financial Technology play in supporting the traditional financial industry in its digital transformation? (II). Should we expect and plan for a society that will be 100% digital? (III).
I) The main components of a successful digital transformation
Succeeding at digital transformation is hard, and specific to various organisational factors. At a macro level, both human capital and investment capital are key.
From a human capital perspective, buy-in from everyone in the company is important. Most critically, executives and top management need to show their enthusiasm for the process. Further on, there is a need to provide training and resources so that everyone in the organization feels prepared to embrace the shift, and excited by what digital can deliver for them in terms of productivity and enabling them to more effectively achieve their goals.
That is why the Lhoft and the Centre for Finance, Technology and Entrepreneurship (CFTE) have launched the , to help financial institutions upskill their employees, and help finance professionals broaden their understanding of the changing landscape of the industry. Designed to help people adapt to a world of technology-driven finance, the recently unveiled begins on Friday, November 27th.
The business case for investment must be clear and the potential for failure must be embraced, with diligent attention to risks and mitigating factors defined and managed on a continued basis.
Of course, there also needs to be some level of investment into digital technologies and related resources, whether built in-house or acquired through third parties, in order to successfully transform a business. The business case for investment must be clear and the potential for failure must be embraced, with diligent attention to risks and mitigating factors defined and managed on a continued basis. Fear of failure is possibly the biggest hindrance to successful digitalisation, creating paralysis in decision making and progress.
As Arnaud Jacquemin, CEO of Société Générale Luxembourg Group, stated during the Lhoft’s on July 17th 2020: “This (Covid-19) crisis makes us work of course towards an acceleration of an end-to-end digitalization of the way we interact with our clients, with regulators, etc.”
II) Financial Technology plays a key role in supporting the traditional financial industry in its own digital transformation
Financial institutions have begun to see financial technology firms as a core component of their digital future, and have invested more than and digital innovation since 2015.
Digital technologies providers can support transformation by enabling greater efficiency and productivity. Financial institutions in are at an all-time low when it comes to their KPIs. A 5.9% average Return on Equity within the EU’s banking sector is the worst in the world outside of Japan. Technologies such as Regtech, for example, digital identity solutions, KYC and Big Data solutions can drive greater efficiency, lowering costs and help ensure that institutions can maintain, if not grow, their margins, and compete effectively in the future.
From a front-end perspective, the customers must be the centre of attention, with a laser focus on their changing behaviours, needs and expectations.
From a front-end perspective, the customers must be the centre of attention, with a laser focus on their changing behaviours, needs and expectations, shaped by the increasing digital environment around them.
III) Are we moving rapidly towards a 100% digital society?
It is hard to define what a “100% digital society” is. Humans will always need to interact with other humans. However, in financial services, products need to become invisible. As Lhoft CEO, Nasir Zubairi, explains: “Nobody wakes up in the morning wanting to buy a loan, a mortgage or an investment product. You wake up wanting to buy a car, a house, or worried about being able to buy things when you retire. People want to do transactions today and tomorrow. Financial services are there to enable that. Yet we often spend more time on the ‘service’ than the transaction. I believe financial services must and will become more integrated into transaction channels and more invisible. Digital firms such as Amazon, such as Facebook, such as Google, Alibaba and others will become the dominant distributors of financial services.”