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Written by Mike Knight on 6 minutes read

Digital transformation: 7 successes in financial services

Whilst it’s easy to talk about digital transformation, putting an effective strategy in place that delivers business results might be the hardest thing a business can do. Here are some of our favourite examples of companies who rewrote the rules through digital transformation.

“It’s no longer the big beating the small, but the fast beating the slow.”

Eric Pearson, CIO, International Hotel Group (IHG)

Digital technology has already transformed our lives. It’s changed the way we do business, communicate and even how we manage our social lives. However, when it comes to financial services, firms have been slower on the uptake.

According to a 2015 study from Deloitte, 90% of businesses say they expect the impact of digital technology to be transformative. However, only 44% said they had made adequate preparations to do so.

The obstacles come in many shapes and forms. The financial sector is one of the most heavily regulated in the world. Managing data brings companies into contact with a host of compliance issues, particularly with the arrival of GDPR around the corner. So, how do they get ready and minimise operational risk? Here are a few corporations who are already showing the way.

A.T. Kearney promotes agile engagement

A study of bank attitudes towards digital transformation by Kearney found that most wanted to become digital leaders. To get there they would adopt one of three approaches. The first, which includes approximately a quarter of respondents sees digital as a project only – one which is implemented gradually with pilots or prototypes. The second considered digital to be a business in itself under one umbrella. The third, and most advanced group, take a boosted approach of having a dedicated pure digital player (often a subsidiary) inside the firm and create a digital culture from top to bottom.

This third option, it found, accelerated dissemination of digital learning throughout the organisation. The more advanced second option, was also successful at encouraging organisational-wide buy-in and communication. These, it suggested, represented the future for business.

UBS harnesses big data

Swiss Bank UBS has taken big data and employed it throughout the organisation. On the client-facing side they can use data to understand people better and what they need. It enables them to be more proactive at selling products and addressing their needs.

However, they also use it to understand themselves. By partnering with Predict X they used historic information about their spend on travel, to predict future budgets and manage spend.

To use this, they first ask themselves questions such as:

  • Do we understand the data available?
  • Can they keep pace with constantly changing data protection legislation?
  • How can they personalise this data?
  • Can they use a multi-channel approach or integrate it into one place.

By understanding what data is available and how to make use of it, they can save money and help them provide a superior service to their clients.

Barclays restructures for digital

In 2016 Barclays Bank announced a major new restructuring which would base the business on two units: a ring-fenced bank in Britain and corporate and investment banking. A key part of this has been a deepening engagement with digital technology. Already it is one of the leaders in offering mobile and online banking to customers on the go, but it is also incorporating a host of new technologies including voice recognition, 3D printing and even bot customer service agents to transform its customer-facing operations. It also launched a digital investment platform to existing customers promising lower fees than its existing offerings.

Deloitte uses Apple to improve business design

In 2016 Deloitte introduced a new Apple Practice to improve business design and implement solutions via the iPad and iPhone. It was a first of its kind and included more than 5,000 strategic advisers who solely focused on helping businesses change the way they work across the entire enterprise.

This could include everything from customer-facing functions such as retail, field services and recruitment to R&D inventory management and back-office systems.

As part of the partnership they are also introducing a new offering from Deloitte Consulting called EnterpriseNext which helps their clients fully leverage the opportunities of the IOS hardware.

Admiral turns to internet of things and big data

The rise of big data and internet of things (IoT) technology is enabling many insurance providers to offer more personalised and – in some cases – less expensive insurance premiums.

One of the leaders has been Admiral Insurance who have integrated IoT technology as a key pillar of their car insurance offering. Their LittleBlackBox policy uses telemeters installed in cars to analyse every detail of their driving habits.

It shows at what time of day people are driving, how many miles they are clocking up and on what kind of roads as well as assessing their driving ability. The recorder will spot moments of excessive braking, acceleration or speeding to see how safe a driver is.

The data enables Admiral to evolve towards a more proactive risk analytics model. Rather than assessing risk based on age or occupation, they can assess based on actual driving patterns delivering a premium tailored to that individual.

Other attempts proved controversial. Admiral had hoped to offer a service by which people shared their social media profiles. Data such as social media posts could then be inputted into a central system and added to the calculation process. However, such attempts run into data privacy issues and after a public backlash they abandoned the policy.

American Express uses blockchain to speed up international transactions

In 2017 American Express announced a partnership with one of the fastest growing cryptocurrencies in the world to manage transactions between the US and UK.

Ripple was at one point the second most valuable cryptocurrency in the world (as of writing it is now the third after Ethereum) after making stellar gains in the latter part of the year. The surge was largely sparked by the involvement of big banks and payment providers.

Using the blockchain technology that underpins almost all other cryptocurrencies (but not all) – Ripple creates a decentralised and immutable ledger in which there is a clear record of every transaction. Its decentralised nature removes the necessity of a middle man which reduces fees and dramatically increases the speed of each transaction. While traditional banks may take several days to process a transaction, and close at the weekend, this is not the case with Ripple which can make a transaction in less than 10 seconds.

Experian transforms its purpose and offering

Experian is the largest credit reporting service in the world. Although it existed before the rise of digital technology it has successfully leveraged the tech to transform the way it operates, the service it offers customers and even its entire modus operandi.

In the pre-digital age Experian was simply a credit reference agency which helped lenders assess borrower risk. Now though, it has leveraged technology to become an agile business with many of the hallmarks of FinTech.

Key to its change was an ability to recognise how its customers wanted to access information and identify products which would deliver that. Today it offers fraud prevention services to businesses, allows people to check their credit reports online and provides enhanced market analytics.

Experian’s example is a good indicator of where businesses need to go. Digital technology can and should be more than simply a disruptive system capable of delivering enhanced customer-facing services. Harnessed to its full potential it can revolutionise a company’s entire nature and offering. To embrace this change, businesses need to hard-wire it into their structural DNA. Aside from just being a front office function, systems throughout the back office should be overhauled to incorporate digital strategies as a key function of business design.

Yes there are risks. Already there have been examples of companies falling foul of digital innovation and there will be more (see our next article). However, by choosing the right partners and configuring systems effectively it is possible to fundamentally alter the very fabric of financial services through technology.

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