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Transformation means bold, fundamental change
Nearly every bank makes bold claims about transformation. But our interviews with banking transformation leaders found that transformation means different things to different banks — and sometimes even to different individuals within the same bank. EY transformation professionals share the same view as many of the banks that we interviewed, that transformation means a fundamental change in how a bank operates and the products and services it provides. It is absolutely necessary for long-term survival in the face of the disruption brought by digital-first challengers and evolving stakeholder and customer expectations.
This means that to succeed, the transformation process should never end. Of course, individual initiatives may finish, but they should all contribute to an ongoing program of adaptation. However, not all banks think this way. For some, transformation means refining and streamlining products, services and processes, rather than radically rethinking them. Therefore, the first and most fundamental step required for banks to transform successfully is for executives to grasp the holistic nature of the change their institutions must undergo.
Put customers at the heart of transformation
Banks also need to adopt a customer-first approach to transformation. All too often, transformation programs are primarily driven by an imperative to cut costs or meet a regulatory directive. This is of course vital. But, so too is the need to transform customer experiences. Given the new business focus on the customer, even transformations primarily driven by cost-cutting or regulatory compliance should be viewed through the lens of customer experiences. Banks have a diverse range of customers, so they must consider their customer base’s different needs when designing the transformation portfolio.
“Previously, our ambition for transformation was to become a technology business, because we realized that technology is the future of banking,” explains Peter Adams, CEO of ING in Belgium. “That’s true to a certain extent, but the word ‘client’ was missing completely. The new transformation plan for ING Belgium, called Route24, is very different and contains more than 100 initiatives that ultimately drive value for internal and external customers.”
Questions banks should be asking as they look to redefine transformation:
- Is our transformation strategy bold enough?
- Does our transformation strategy, plan and actions preserve or improve margin and operating leverage in times of uncertainty?
- Are customers, employees and business partners at the forefront of our transformation plans?
- How do we create a culture of continuous transformation?
- Are we providing our leaders with the training and coaching to rethink transformation and understand what success looks like?