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Can Banks Boost Their Digital Savviness?

PwC shares five digital behaviors that are crucial in a changing landscape.

Digital banking is among the trendy phrases dominating conversations in the banking industry. But this concept is real and has many implications for banks as they define their roles and strategies for the foreseeable future. If anything, the phrase digital banking is redundant, as banking has become a digital business, with most transactions conducted over online and mobile channels. And where analog banking still exists, it's being redefined to incorporate digital, as seen in initiatives from Citi, Wells Fargo, BBVA Compass, and other banks that are launching branch formats that incorporate mobile and video capabilities into the operations.

[Industry veteran Jeff Dennes will head BBVA Compass' newly created digital banking division; former Capital One Bank chief digital officer will serve as director of customer experiencee and business Intelligence.]

When it comes to operating as a digital enterprise, banks are among the leaders, according to PwC's sixth annual Digital IQ Survey. Businesses that can boast a high Digital IQ, the PwC research suggests, are those that demonstrate five "digital behaviors":

CEO actively champions digital. Eighty-one percent of the top performers across all industries in the study say their CEO is an active champion in the use of IT to achieve business strategy.

Strong CIO-CMO relationship. Seventy percent of top-performing companies say they have a strong CIO-CMO relationship.

Outside-in approach to digital innovation. Top performers supplement the traditional internal sources of innovation with outside sources such as universities, labs, analysts, and vendors, according to PwC.

Significant "New IT" platform investments. PwC defines "New IT" as processes, architecture, organization, and governance, with IT evolving into a "services orchestrator" instead of a centralized authority.

View digital as an enterprise capability. "Digitally savvy resources" must be woven throughout the business, not centralized in a single function.

The fifth behavior is a reminder that digital will define the ways employees work and the ways customers receive payments, services, and communications. It's about building a culture and sense of mission, not implementing a project.

Banking's transformation into a digital business has been sped by mobile technology -- not just mobile banking and payments, but mobile as a ubiquitous business tool. As BS&T associate editor Bryan Yurcan reported in a recent digital issue, the challenge now is to figure out what's next for mobile banking in terms of customer expectations and technical capabilities.

And although so far US banks have been mostly on the sidelines of mobile commerce, they are on the front lines of the battle to secure payments, regardless of channel. BS&T associate editor Jon Camhi recently identified efforts banks must make now to fight the growing scourge of payments fraud.

It's clear that achieving digital savviness requires significant investments in technology, major mind-set changes, and process transformation. It can't just be lip service.

[Enabling the shift to digital banking is a key requirement for today's bank technology executives, and some already are posting significant successes. Do you know a CIO or line-of-business exec who is successfully leading this kind of transformation? Nominate that executive for Bank Systems & Technology's 2014 Elite 8 awards. The October 2014 report will identify and profile some of the most innovative and effective tech executives in banking. Nomination deadline is June 6, 2014.]

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio

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KBurger
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KBurger,
User Rank: Author
5/22/2014 | 4:50:06 PM
re: Can Banks Boost Their Digital Savviness?
That's a good point, Mark, and alludes to the long-time effort (well, maybe more discussion than effort) to move from a product-centric approach to a customer-centric focus. Similarly, we hear a lot about how omnichannel and digital best practices involve not just replicating a web site on a mobile device, etc. Each form factor has to be addressed in the way that makes sense for that platform -- while also guaranteeing a consistent experience across all platforms.
mark.ranta
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mark.ranta,
User Rank: Apprentice
5/22/2014 | 3:06:26 PM
re: Can Banks Boost Their Digital Savviness?
I agree on the outside in approach but I look at it from a different perspective. Banks have far to long looked at their products, processes and tailored their technology offering to handle what they already had. I think the outside in approach will force banks to "rethink" their models all together and stop looking at the problem as simply adopting digital and move to adapting their offerings to leverage the new digital landscape. If we can get to that point as an industry real innovation will start booming.
Kelly22
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Kelly22,
User Rank: Author
5/22/2014 | 2:32:44 PM
re: Can Banks Boost Their Digital Savviness?
True, bringing in outside experts also carries a certain amount of risk. I imagine companies with strong leaders who communicate the reasoning behind that strategy are more likely to have success with it.
KBurger
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KBurger,
User Rank: Author
5/21/2014 | 8:40:34 PM
re: Can Banks Boost Their Digital Savviness?
I actually can see that cutting both ways. There can be tremendous value in bringing in that "outside" fresh perspective. Yet it also can be demoralizing and destructive. As we know there's "creative destruction" but also wasteful and unnecessary destruction. How many times have the genius outside experts been brought in, they do their damage and then go on to the next assignment? At the same time, employees often are resistent to change, they will fight the outside perspective simply because it is threatening. So it all comes back to communications, and leadership
Kelly22
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Kelly22,
User Rank: Author
5/20/2014 | 9:14:34 PM
re: Can Banks Boost Their Digital Savviness?
Digital really needs to be built into company culture, and I think each of these five behaviors can contribute to that. I also like the idea of an 'outside-in' approach. Outside organizations can be great sources for innovative ideas that internal employees may not consider.
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