Digitisation in the banking world
Comfort zone was yesterday – digital change is today
According to the Bundesbank board member Andreas Dombret, banks need to actively deal with the challenge of digitisation; perseverance or ‘sitting out’ problems is not enough. In the area of payment transactions, Fintech companies are increasingly moving in and providing strong competition to the banks. The digital revolution is changing all industries and value chains alike. The technological challenges are constantly increasing to meet the higher expectations of the customers. In addition, new competition for the established banks is coming from the fintechs.
Disruptions are shaking proven business models
Disruptive thinking and an awareness of the changes should be the core of the strategic agenda at Board level. Therefore, decision-makers should demonstrate courage to prevent the erosion of sales. Business models that are successful today, in the area of transactions in particular, will no longer be the exclusive realm of the banks in future.
Key competences of employees
In the conflict zone between regulation and innovation, the list of tasks with the highest priority is very long. In the process, having the right people is essential to pave the way for digital success. It is not only a matter of finding or developing suitable digital talents, they also need the necessary degree of freedom to go the extra mile filled with passion and corporate identification. For companies in the finance sector, it is essential to understand that it is not just about acquiring technological and technical expertise, but – much more importantly – also establishing a corporate culture which takes on these challenges and is consistently exemplified by the actions of management. Professionals must be able to present their ideas and concepts and to do this in such a way that other sections and departments can understand their pros and cons, discuss them and, at best, accept them.
Digitisation at the Opel Bank
The new Opel Online Bank and its deposit business, which kicked off more than a year ago, works mainly digitally and without branches, whereas the financing business is handled through the dealer network. Both areas have experienced strong changes due to digitisation and significantly modified customer behaviour and demands. The Internet plays a key role in the sales and service processes for vehicles. The Opel Bank actively helps its trading partners to expand their digital sales and marketing channels and to take advantage of successful lead generation. The end customer receives the straightforward information he needs for his purchase decision, for example, via web calculators. As the current DAT Report (German Automobil Treuhand GmbH) shows, the purchase price and the rate of the finance payments are two of the three top criteria when it comes to making a vehicle purchase. Thanks to a number of attractive financing and leasing offers, the Opel Bank is able to identify financing alternatives right at the very beginning of the purchase process and thus make choosing a vehicle a lot easier.
“Digitisation makes new and further-reaching demands not only on the Opel Bank as a whole, but also on each and every employee. In particular, a high willingness to explore and evaluate the opportunities and implementing initiatives were required,” said Jörg Ziesche Senior Director and authorized representative of Opel Bank, who is responsible for digital transformation, among other things.
The ability to efficiently implement larger numbers of complex issues in parallel, is a key success factor – even for small teams. Agile working methods support efficient cooperation and continuous improvement. Alongside banking expertise, the key competences are a strong customer focus and communication skills, especially technical understanding and experience of software and digital processes in companies of different sizes. Proper prioritisation, smart, efficient working practices and self-organization are as indispensable as self-confident and interdepartmental cooperation and new ideas to better solve existing challenges.
The staff needed to help implement this change
Some financial companies are getting innovative freethinkers on board to respond to new customer needs. However, it should be noted that it is not only innovation and creativity that is required for the successful implementation of digital transformations in the banking sector. In the financial world in particular, it is crucial, in addition to all the obvious required skills, to keep the regulatory requirements in mind and not to completely displace all the existing processes and solutions. In addition, even uninhibited lateral thinkers will have to exhibit a sufficient degree of adaptability to feel at home in the banking environment. Disruptive thinking is an important factor, but cultural conditions also have a high priority here. In addition to hierarchical thinking, the required dress code and compliance with the institution’s specific traditions, it is important to use communication skills to inspire and persuade various departmental levels every day anew.
Candidates in the banking sector should be aware of the company’s values and accept the existing structures. A too dominant or casual attitude can be interpreted in this context as overconfidence or even lead to discord.
At the executive level, it is important to note first of all that the digital transformation means a fundamental change in working practices, as well as changes in the management and the development of new roles and responsibilities. Transparency, communication and a willingness to change are important factors to make sure they encourage rather transform their employees in the process. Because what makes the decisive difference for companies from all sectors is having a digitally proactive workforce – and this is the key to success.
How can financial institutions win points over the fintechs to make themselves more attractive as an employer – and to remain so?
Fintech companies have their focus in the field of financial services and do not provide any entirely new products and services. Rather, they differentiate themselves from traditional banks and financial services companies primarily in that they offer their deals and services with a noticeably higher customer orientation. Deutsche Bank, Commerzbank, HVB & Co. and a number of other well-known institutions use fintechs to help fuel their digitisation. However, the fintechs are also competitors in the fight for the right candidate.
Financial institutions can often score points with applicants on the strength of their corporate brands as well as the size of their companies. For many candidates, a solid customer base as well as an attractive employer branding is a motivation to bind them to the company. Particularly candidates, who place value on security and stability, are drawn rather to a large company in the banking sector than a Fintech start-up that could be ousted from the market in the near future.
However, it is advisable that the Board members and human resources departments of financial institutions closely scrutinise the design and planning of digitisation strategies and projects as well as their corporate culture as an employer. Transformation will not be achieved with an employer branding project or measures such as “No tie day”, but rather it is important to instigate a transformation of the corporate culture, such as flexible working hours, options for working from home, free Internet access in the workplace and many other innovations.
In summary: Financial institutions must switch from a product-centric to a customer-centric point of view, because digitisation means more than simply setting up an app or a Facebook page. For successful digital deployment, you also need to have the right staff on board as well as the correct strategy. It is not only suitable key competencies of employees that are required, the entrepreneurial framework must fit in order to pave the way to success. Digitisation is not an issue that can simply be delegated to IT or the Research & Development department. Every single employee will be affected by changes in their own areas of responsibility, and ultimately they are all members of a dedicated company workforce who together will shape the digital transformation.
Henning Sander, Head of the Business Unit Banking, Hager Unternehmensberatung