1. technology and computing

Organizing for
Omnichannel
Delivering the DigicalSM Bank
of the Future
Outline
• Banking is becoming a digital business everywhere
• The best practice banks are in Europe and Asia, not the Americas
• Omnichannel leaders are winning through customer experience
innovation
• Requires extensive change to how the bank works
Page 2
Bain has been working with 78 leading
global banks to assess digitalization
Page 3
Retail banking is becoming a digitallyled business
2020E
average
95%
2013
average
81%
Trajectory
2020
Page 4
The most digitally-engaged are
happier but also truly DigicalSM
DIGITAL CUSTOMERS MORE LOYAL …
Page 5
DigicalSM
= the marriage of Physical and Digital
…AND MORE DIGICALSM
Five imperatives for change
underpinning RBOF…
I
Create digitally enabled customer experiences
II
Build an omni-channel sales and service model
III
Position technology at the heart of strategy and execution
IV
Digital on the inside: fund investments through digital efficiency and reprioritization
V
Organize as an innovative enterprise
Page 6
…and 18 core capabilities that leaders
are mastering
I
CREATE DIGITALLY ENABLED CUSTOMER EXPERIENCES
Differentiated, digitally enabled
experiences
II
Relevant, simple and easy to
buy products/offers
Better decisions from
customer, risk and mktg data
Digital engagement of
customers
DELIVER OMNI-CHANNEL SALES AND SERVICE
State-of-the-art digital presence
III
Streamlined, technologyenabled physical presence
Contact center 2.0
Consistent cross channel
execution
POSITION TECHNOLOGY AT THE HEART OF STRATEGY AND EXECUTION
Smart view of the customer
IV
Real-time, one-and-done
processing
Flexible architecture with
nimble development processes
Efficient, secure infrastructure
FUND INVESTMENTS THROUGH EFFICIENCY GAINS AND REPRIORITIZATION
Customer migration to anywhere,
anytime self-service
V
Efficient, digitized processes
Decommissioning and reprioritization of
legacy costs
ORGANIZE AS AN INNOVATIVE ENTERPRISE
Systematic change management
Page 7
DigicalSM operating model
Rapid innovation and business reinvention
Compared to the rest of the globe,
Americas banks are lagging
31 points
33 points
Average = 52
42 points
Average = 51
Average = 43
Degree of
digitization:
Page 8
APAC
High
EMEA
Medium
High
Medium
Americas
High
Medium
Leading RBoF Banks are delivering
signature omnichannel experiences
Manage my money and
cash flow
Buy a home
Move my money and pay
for things
Buy a car
Send money to others
Move my home
Fund my impulse purchase
Save up for something
Page 9
Make my money work for
me
Protect my family
Provision for college
Protect my home and
belongings
Provision for my retirement
Protect my car
BT Superforlife – an engaging
omnichannel experience
Moving super triggered
by life event (e.g.
marriage, job change,
home purchase)
Research made easier
through low, transparent
fees
Page 10
Simple online application,
investments based on age
(go into the branch or on
the phone)
Ability to alter account
and investment options
based on risk profile
Ability to simply purchase
additional complementary
products (e.g. insurance
options)
Full integration with
digital retail banking
experience (e.g.
seamless funds transfer)
Seamless omnichannel
account management and
across Westpac brands
Scalable advice
(e.g. through call center
and branch today)
Physical networks changing as
customers transact less in branch
Page 11
Rapid technology enablement in the
branch to enable digital self service…
Page 12
…and change in front line staffing to
sharpen focus on sales and advice
Page 13
Some common features of global
DigicalSM leaders
• Change journey spans a decade or more
• Enduring top down leadership and vision
• Substantive decommissioning
• Out-investment vs. competition
• Faster to change vs. competition
Page 14
Multiple journey archetypes
Distribution,
Product and
Marketing
• Build digital channels capabilities separately
• Develop ‘signature’ digital channel experiences
• Reinvest: growth dividend in omni-channel
and technology innovation
• Sticking point: limited true omnichannel
functionality, potentially limited back end
systems capability
• Simplify products, lean processes and
dramatically reduce branches
• Change customer and frontline behavior
• Reinvest: cost dividend in technology (front
and back)
• Sticking point: complex, outdated back-end
technology; lack of digital
• Invest in data, CRM, architecture and core
systems
• Standardize, consolidate and simplify
processes
• Automate process and simplify platforms
• Improve experience through better process
• Reinvest: technology dividend in rapid
customer innovation
• Reinvest: cost dividend in customer facing
technology
• Sticking point: lead-time and cost to
complete
• Sticking point: complex outdated back-end
technology; slower to innovation
Operations and
Technology
Page 15
Technology led
Process led
2004-2014
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
I. Create digitally enabled customer experiences
Differentiated, digitally enabled experiences
Relevant, simple and easy to buy products/offers
Better decisions from customer, risk and marketing data
Digital engagement of customers
II. Deliver omni-channel sales and service
State-of-the-art digital presence
Streamlined, technology-enabled physical presence
Contact center 2.0
Consistent cross channel execution
III. Position technology at the heart of strategy and execution
Smart view of the customer
Real-time, one-and-done processing
Flexible architecture with nimble development processes
Efficient, secure infrastructure
IV. Fund investments through efficiency gains and reprioritization
Customer migration to anywhere, anytime self-service
Efficient, digitized processes
Decommissioning and reprioritization of legacy costs
V. Organize as an Innovative enterprise
Systematic change management
Digital operating model
Page 16
Rapid innovation and business reinvention
DigicalSM* is a significant challenge to
the operating model of the bank
Design Principles
Structure
Accountabilities
Governance
Ways of working
Capability enablers
People
Page 17
DigicalSM
= the marriage of physical and digital
Process
Technology
Structure: Four models evident in
DigicalSM leaders
DIGITAL
SEPARATION
• Digital channels
separated from
physical
• Digital Organization
houses innovation
and venturing
• Manage branch
digitalization
separately
• Cross-pollinate with
incentives etc.
Beginner
Page 18
CROSSFUNCTIONAL
MATRIX
INTEGRATED
ORGANIZATION
• Strong technology
function leading the
charge on
digitalization
• Functional overlay
focused on customer
experiences or
segments
• Digital and physical
channels integrated
into a single
structure
• Typically supporting
a ‘back to front’ view
of digitalization
• Senior leadership,
dedicated functional
representatives
• CIO typically making
the calls on
technology
prioritization
• Tasked to develop
new proposition/
experience
• Customer
experience and
innovation housed
within the integrated
organization
TECHNOLOGY LED
• Channels/
distribution as
technology ‘takers’
Beginner
• Backed with budget
and some ringfenced tech.
resource
Intermediate
• Integrated
digitalization agenda
across channels
• Technology
organized as a
‘service function’
Advanced
Ways of Working: Pace of change
requires agility and stability
AGILITY FOR THE CUSTOMER
• Design engineering led change for digital
channels and experiences
• Rapid evolution to maintain pace with
mobile/tablet device capabilities
STABILITY FOR THE UTILITY
• Consistent investment prioritization for
large infrastructural changes:
-
Data
Core
Processes
Branches
• Seamless delivery across channels
• Multi-year programs and investments
• Leveraging external innovation where
appropriate
• Driven by vision and perspective on
technology leadership
Requires new design
engineering talent
Page 19
Requires bold technology led
decision making and talent
Ways of Working: significant
consequences for IT
Priorities &
Alignment
IT Strategic Planning
Software Development Lifecycle
(SDLC)
Delivery
Capabilities
Portfolio & Demand
Management
Business
Relationship Management
• Nimble end-to-end SDLCITprocess
(e.g.,
Operations
Agile, DevOps) to enable speed to market
for digital products and services
Operations
Capabilities
IT Security and Risk Management
Architecture Governance
Vendor Management & Procurement
Organization
Roles and Structure
Technology
Applications
Page 20
• Org structure designed to meet digital
business needs and appropriately integrate
Decision
Rights
Talent & Digital Expertise
or separate
roles and responsibilities
Data
Infrastructure
Ways of working: multiple innovation
models tried – partnering becoming key
BUILD
PARTNER
BUY
Internal
1
Grass roots
innovation
2
External
3
Skunk-works/
internal start-up
4
Center-led
Page 21
5
Internal VC
6
Internal incubator
7
Tech lab/
research center
8
Strategic
partnerships
Open platform
innovation
9
Spin-in
10
Acquisitions
Ways of working: Partnering with the
ecosystem
Page 22
Note:
Source: Anthemis Group
Ways of working: Culture
• Customer experience as the North Star
• Act like a technology company: 10x innovation acceleration
• Simple and lean
• Collaborating and co-creating - Infraco and ExperienceCo
• Embrace and incorporate new talent
• Partner well
Page 23
The organization and operating model
is evolving to support RBOF
Partnering & Innovation
Marketing
Operations
Technology
Page 24
Channels
Experiences
Channels
Products
Channels
Products
Segment, Marketing
Product, Segment,
Marketing
APIs
Operations
Operations &
Technology
Technology
Takeaways
• Banking is becoming a digital business everywhere
• The winners will be customer-led (this is innovation after all)
• Delivering requires a fundamental rethink of the operating model
• Pace really matters
Page 25
Predictions
• Acceleration of partnerships between banks and innovators
• More ‘big name’ tech hires into banks (and some that leave)
• Emergence of more ‘omnichannel’ organizational structures
Page 26