Retail Banking in the Era of Digital Transformation: What’s a Leader to Do?
Digitalization is changing the game not only for banking, but also for what it takes to effectively lead the way through the transformation. What does this mean for leaders of retail banks?
The wave of digitalization hitting the retail banking industry is changing the game for leaders in ways that create both challenge and opportunity. Let’s keep in mind that there are several key drivers around the digitalization of the banking industry. These include the need to serve the growing number of consumers who prefer mobile and online banking; a desire to reduce the high costs associated with personal customer service; and a strategy of expanding market presence and growing volume without incurring the capital and labor costs of building and staffing brick-and-mortar facilities. All of these require the ability for leaders to manage paradox – both inside of their organization and outside.
Consider the following…
Consumers are sending mixed signals about their own desires around digital banking. Despite the fact that 82 percent of consumers globally use digital channels to fulfill their banking needs, a full 60 percent
, across generations and income levels, say they still want and need a human touch. In addition, many retail banking employees lack the skills to integrate digital technologies into their customer interactions and, even worse, see digitization as a threat to their livelihood.
What does this mean for leaders of retail banks? Like their counterparts in other industries, they are facing a new normal in which rapid technology advances are disrupting business models and the customer’s voice is shaping new products and services to an unprecedented degree. The most effective leaders will be those with the intellectual rigor and creativity to craft new strategies that effectively mix digital and physical capabilities to satisfy customers.
Moreover, they will need to believe strongly and invest significantly in workforce development to upskill and reskill bank employees so they become proficient with digital tools and comfortable working “side by side” with intelligent machines. Leaders will have to engage staff in recognizing the advantages (and the cold hard reality) of this new way of digital/physical banking, while employees will have to nurture their own “learnability” in order to stay relevant and employable in the banking industry.
From a capabilities standpoint, bridging the digital divide in retail banking will require leaders to exercise strengths in five key areas:
Vision – Envisioning new business strategies, then helping all stakeholders in the organization see and embrace the many upsides of digitization while still being cognizant of the implementation challenges.
Paradox – Creating customer touchpoints that combine the speed and ease of automation with the opportunity for human interaction when needed. Leveraging legacy strengths of the organization while introducing fresh skills and capabilities.
Collaboration – Establishing an account ecosystem that provides a single view to the customer and nurtures their engagement through the combination of digital access points and hyper-personalized service.
Diversity – Fostering cross-functional teams that represent different genders, ages, ethnicities, and financial disciplines to develop innovative products and services that can compete strongly against both traditional and disruptive competitors across all customer segments.
Transformation – Recognizing that cultural transformation must precede strategy implementation, and that changing employee’s minds is more important than swapping out IT systems. Build a culture of continuous learning in which employees can continuously upskill and reskill to benefit the organization as well as their own career growth.
Digitalization is changing the game not only for banking, but also for what it takes to effectively lead the way through the transformation. Are your leaders prepared to drive performance amidst the dynamic and uncertain business climate facing today’s retail banking industry? Do they have both the traits and capabilities to overcome the talent management challenges facing the industry? Are they being assessed on outcomes that measure leadership effectiveness resulting in sustainable performance? Realizing the full benefit of hard-won competitive advantage will boil down to identifying and developing the digital leadership skills
critical for today's retail banking executive.
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