Risk Watch with Alberta QUARCOOPOME: How well are you preparing for the digital banking revolution?

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There is going to be digitization of the workforce in a way we have never seen before. In 10 years, probably less, we will have substantially fewer employees, and the ones we do have will be significantly different from what we have now”. —Director, Bank Governanance Ledership Network,

This Photo by Unknown Author is licensed under CC BY-SA-NC

Dear Readers, my recent thirst for knowledge about the latest trends in banking has led me into new and exciting happenings around the world. On this journey, I have witnessed the demonstration of a robot taking instructions from a human being with so much ease and finesse that the science fiction books and movies I watched during my childhood is no more a figment of man’s imagination.   Moreover, I wish to use this column to highlight the interesting nature of the fourth industrial revolution which has generally been described as disruptive although in a positive way. Indeed, when we consider the benefits being derived, we cannot sit down any longer and wish it away because it has come to stay for a long time.

I have been following Jim Marous, the co-publisher of “The Financial Brand” and publisher of the “Digital Banking Report”, a subscription-based publication that provides deep insights into the digitization of banking, with over 150 reports in the digital archive available to subscribers. I recommend fellow bankers to subscribe to it to gain more knowledge on latest trends in the digital banking world and relate to it as they prepare their minds and also plan to adapt to the new order so that they are not overtaken by events. For those who are techno-phobic, this is the time to look into your future with telescopic minds.

The above quotation by the Director of the Bank Governance Leadership Network, (BGLN) in their April 2018 publication titled: “The future of talent in banking: workforce evolution in the digital era,” should send signals to all bankers to believe in the need for a change of mindset to adapt to this paradigm shift in banking. At the BGLN’s meeting in March 2018, various key issues emerged:

  • Technology and broader trends are reshaping bank workforces.
  • Banks are in the early stages of planning for workforce transformation
  • Talent strategy has become a critical issue for boards

The Effect of the Fourth Industrial Revolution on bank employees

As a result of the above, technology and broader trends are reshaping bank employees.

With the introduction of technologies such as robotic process automation, machine learning, and artificial intelligence, there is a significant impact on functions like

compliance, payments, and retail services. Can these functions be effectively executed? Definitely not with all the existing workforce. There is a growing need for employees with the skills to understand how these technologies can be applied, while also being adaptive to manage the rapidly changing systems. The practice of banking needs to be infused in the management of these transformational changes. How ready are the employees? It is about time that professionals partner the technocrats in producing digital products to serve the customers’ specific needs. As one bank staff puts it bluntly: Some jobs are lost; some new ones are formed. Basically as with all other jobs that face the same challenge: skill up or ship out”. What percentage of bank staff are ready to skill up or ship out?

Establishing a Digital Culture

So long as banking remains a human institution which now depends on machine learning to succeed, we cannot eliminate the human touch. The transformation process requires a shift towards a digital culture. Culture represents a shared set of values and behaviours that define how decisions are made and strategies are implemented. All executives, the board of directors and, indeed, all levels of management throughout a financial institution must support the culture.

This culture must be strong enough to guide all staff to act in accordance with set guidelines supporting the brand as well as the institution’s goals and strategies. Ignoring culture as part of digital transformation puts the entire change process at risk while also impacting financial performance. The culture should continue to focus on the customers’ needs, driven by data.

Recruiting staff to drive the digital banking revolution

A bank with a digital culture can make decisions and deliver results faster since the organization is more data-driven. Most digital organizations use technology to assist with performing more basic functions. The new breed of bank staff should be more customer-centric, support creativity and innovation. Based on this, banks are now recruiting the talent needed to excel in a digital economy. Millennials and individuals with advanced technical capabilities are much more likely to want to work at financial institutions that have built a reputation for providing a collaborative and creative environment. We shall elaborate on that in my subsequent publications.

Building the digital organization

 A digital organization must be built in anticipation of change. This will alter the way almost every organization operates, requiring new processes, skills, products and approach to meeting consumer needs. Bank staff must be prepared to accept change, be aware of the ways change can impact their work and be willing to disrupt themselves as needed in order to cope with the new digital culture. For staff who are not technology savvy, all is not lost. Banks would have to place staff in areas of their competency and where there are no vacancies, there should be planned compensation benefits for those who would have to exit, with of course, a human face.

**The components of a digital culture

Finally, let me leave you with some extracts of what Jim Marous recommended in his April 2019 article, which defines components of a digital culture:

“Innovative. A digital culture is supported by a ‘hunger to learn with a permission to fail’ mentality, where employees are encouraged to embrace change while being risk aware. With data at the center of innovation, there is development of new ideas based on facts and trends. There is the encouragement to think out of the box instead of doing ‘business as usual’.

Data-driven. Beyond simply using data and analytics to review past performance, a digital organization leverages real-time insights to drive instant shifts in decision making on a customer-by-customer basis.

Consumer-focused. A digital culture is focused on the customer journey, where ideas can come from outside the organization and where improving the customer experience is central to all decisions.

Collaborative. The working environment, both physical and virtual, is often not structured around products and services, but with intermingling of departments, functions and products. This ‘open’ structure supports agile decision making and much greater cross-departmental interaction on behalf of the customer.

Responsive. In a digital culture, there is an emphasis on speed. Adjustments to opportunities and threats are made incrementally based on market trends and consumer needs/behaviors. Flexibility, scalability and agility become vital assets, with perfection sometimes sacrificed for being first in the marketplace with a solution.

Transparent. Potentially one of the most important components of a strong digital culture is transparency. Individuals throughout the organization must feel safe to take chances, share ideas and interact in ways that may not have been the norm previously. In addition, management must clearly communicate all strategies, goals and objectives”.

Well said, Jim Marous. This is the time for leaders to engage staff to be aligned to the digital transformation to get their support at all levels. Dear banker, my duty is not to scare you but remind you of the disruptive takeover of digital banking. What can you do about it?

  • Are you ready to embrace change?
  • To upgrade yourself to be more relevant on the job, and not be square pegs in round holes?
  • To collaborate with the millennials who are coming on board the fast-moving banking train? They will still need guidance and mentoring because the machine does not teach those human qualities.
  • Are you ready to assist the technocrats to infuse more risk management concepts in the big data analytics, so that the world is not over-riden with machines?

Without much ado, I urge all bankers to make themselves useful under any circumstance so that they are not overtaken by events. It is no more about debit and credit. Machines are doing it. The fourth revolution has come to stay and the millennials are waiting to jump on the wagon to drive it. However let us use the experience and people skills and infuse great teamwork among all levels to make it work.  The machines should be controlled by humans and not the other way round!

**Source: The Financial Brand Newsletter. The Digital Banking Report, 22nd April, 2019.

ABOUT THE AUTHOR

Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of Three books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story” and “The Modern Branch Manager’s Companion”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.

CONTACT

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Email:[email protected]alkanbiz.com  or [email protected]

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