5 Questions for Bankers to Understand Their Digital Maturity

Many banks have already embarked on digitalization strategies, started transformation initiatives, or moved towards becoming agile organizations. But how successful have these ambitions been?

In a recent interview, former Barclays CEO Anthony Jenkins described the banking industry as "museums of technology." No doubt that was something of an exaggeration given the considerable sums most banks have already invested in technology and continue to do so.

However, the point he was making was that most banks are failing to properly embrace digital transformation. So just how many banks have achieved real maturity when it comes to their investments in digitalization and how do they know?

On the surface, it is not always easy to work out. The numbers might look good, customers might appear happy, and systems could seem to be under control. But problems could be looming just around the corner. Here are five questions that will help those who are on this journey to make a quick assessment and perform a simple sanity check to discover if they are on the right path.

Q1: Can you be truly paperless?

But printing a downloaded PDF, filling it in and signing it, and then scanning and sending it back to the bank is not paperless.

This causes a host of problems, from media breaks during data transfer to error-prone archival processes via microfiche systems and many others where manual intervention is still required.

Modern Generative AI-based solutions can overcome these challenges, but they need data to work, not paper trails to follow. Generative AI will soon be everywhere to both replace knowledge from now-retired personnel and fill future gaps that appear from the emerging war for talent. Banks that cannot deploy it will be at a serious disadvantage.

Worst of all, paper hardly allows customer-friendly processes, transparent progress status tracking, or straight-through processing.

Q2: Do your sales teams have access to the right data?

Most external-facing employees have access to automated reports and can request special reports. However, these regular reports often cannot show the whole picture, while special reports take ages for the respective (and often understaffed) departments to complete.

The so-called 360° view on customers is at best a cumbersome manual data mining process through multiple different systems. In the worst case, advisors do not even know what relevant customer data they are not aware of until informed by a disappointed customer.

Q3: Are touchpoints consistent from a client's perspective?

At a time when branch closures are already affecting many customers, it is essential for them to initiate any process via a different channel in a user-friendly way. This means transparency on the status of enquiries, the ability to amend applications, and including proactive and supportive feedback if further information is needed.

It is a key feature of the required change in policy and process that banks need to consider, where the customer is put at the heart of the business — not products or channels.

Q4: How long does your end-of-month "batch" reconciliation take?

This is one of the core disciplines a bank needs to demonstrate. If such an activity blocks systems for multiple days and prevents employees or customers from accessing and using the systems, something is not right. Smart digital banks have turned these exercises into routine tasks.

Also, your treasury team and senior management will be delighted if the bank can perform key reports or book balancing daily, or even intraday. This improved management reporting will allow much faster reaction time and governance in volatile or extreme market conditions.

Q5: How quickly can you set up a new product?

It can be surprising to learn how product lifecycle management in banks is managed, and how little flexibility the IT systems offer when required to manage and create the banking products.

The most uncomfortable revelation will probably come from the product development process itself, where many internal departments (product development, legal, compliance, etc.) are repetitively required to collaborate. Despite this, processes are often still tracked manually and reinvented every time a new product is proposed, without access to the tools to coordinate.

Summary

Replies to these five questions are not going to solve every problem. But they will provide some valuable insight as to the digital maturity of your organization, particularly if the answers are unclear.

Individually, there could be a good reason why the answer to any of these questions does not indicate a systemic risk, as your organization might just lack skills in a specific area.

But shortcomings in all five, or even three, should start ringing alarm bells that your digital aspirations are not on track. It would show there is still a substantial lack of effectiveness and efficiency that data automation would bring. More importantly, these are warnings of potential threats to the future of your organization due to any of the following reasons:

A banker once told me he wanted to learn to walk properly before flying! But in today’s competitive environment, the above points should all be considered akin to basic walking. Flying will take a lot more effort!