The most important strategic objective for financial institution (FI) IT leaders today is leading initiatives that facilitate business transformation through digitalization of services and customer experiences. As I state in my latest report, CIO/CTO Checklist: Best Practices for a Digital Strategy, “CIOs need to facilitate and support business transformation efforts to ensure effective digital channels to multiple customer personas that are fully linked to all of their financial institution’s back-end business processes and technologies.”
This means that CIOs and CTOs should develop and execute a digital strategy in partnership with other areas of the FI to create a unified vision for transformation efforts.
Multiple Challenges Hinder Execution on Digital Strategy
A recent survey of Aite-Novarica Group’s Financial Services (FS) CIO/CTO Research Council members reveals that the major obstacles to a successful digital strategy include cultural inertia, conflicting priorities, lack of employee buy-in, and legacy technology stacks. These challenges can delay or create gaps in achieving the readiness required in the IT function to drive digital transformation.
For example, many banks and FIs have diverse, legacy core systems that don’t fully support digitalizing or automating processes. In addition, customers’ expectations for digital interactions will differ across financial product lines; this creates complexity in determining the right digital touchpoints and interactions in an omnichannel environment for specific personas (i.e., customer segments).
Key Artifacts Help Keep Digital Strategy on Track
According to our recent CIO/CTO Council survey, most IT executives create key artifacts including a blueprint, current state assessment, and digital roadmap to keep their digital strategy on track. The following components are the essential ingredients of a comprehensive, business-aligned digital strategy:
- Current-state assessment of business goals including a target operating model, business and IT pain points, existing technology architecture, and current plans to build out needed strategic capabilities
- Persona-based digital use cases and priorities that address business goals and pain points
- Future-state technology blueprint that outlines major components, technology, functions, integration approaches, data repositories, engagement platforms, core systems, workflow, and tools to support transformation, reporting, analytics, and self-service
- Project roadmap that defines the projects and initiatives to achieve the future-state blueprint, including project descriptions and timelines with high-level cost estimates, as well as definitions of project phases, milestones, and capabilities to be delivered
- Observations and recommendations for changes to organizations and business processes to support the strategy, enabling them to create or evolve capabilities such as predictive modeling and analytics
- Sometimes firms will use peer benchmarking information to refine what needs to be done
As requirements for digital financial services and interactions continue evolving, FI IT leaders should leverage these documents to regularly align digital strategy with strategic business objectives.
Considerations in Executing a Financial Services Digital Strategy
FI IT leaders should address certain considerations when executing a digital strategy in partnership with business stakeholders—and they should do so when building out the fundamental strategy components including the digital blueprint, roadmap, and processes to achieve digitalization and regulatory compliance.
For example, the expectations and requirements for digital interactions in an omnichannel environment for each key persona will need to be defined. Regulations will need to be incorporated into digital processes that the strategy is designed to enable.
My team’s new report CIO/CTO Checklist: Best Practices for a Digital Strategy supports the effectiveness of FI IT leaders in developing a comprehensive digital strategy. Exclusively for Financial Services CIO/CTO Advisory Practice member executives, this research identifies six practices to adopt in building out the fundamental components of a strategy that enables digital transformation and achieves regulatory compliance.
Interested in learning more about how our strategic insights can help you execute a high-return digital strategy that helps realize the full benefits of business transformation?