Digital Transformation Framework

Digital
transformation
framework
A step-by-step primer to accelerate
your digital journey
Saravanan Balaraj
Are you a financial services enterprise looking for

opportunities to unlock the business value in digital
transformation platforms? How can you add the
digital edge to differentiate your services and create a
sustainable advantage? Lets find out.
The new
digital wave
T
he financial services industry has undergone

tremendous changes in recent years. The market has
become highly commoditized, making it difficult
for any enterprise to survive if it fails to differentiate. To
remain competitive, its become a necessity that enterprises
continuously innovate to reduce costs, increase customer
reach, and improve process efficiency by adopting advanced
technologies and frameworks.
The emergence of digital technologies and platforms has added
flavor toand had a significant impact onthe financial
services industry. Just five years ago, smartphones, tablets,
and cloud-based ecosystems didnt exist or were on the fringe
of broad acceptance. But now, business losses and customer
demands around access to banking services delivered through
digital channels are leaving enterprises with little choice but
to adapt digital platforms. Customers may jump ship and go
elsewhere if they do not experience a consistently satisfying
experience across digital channels or if they find that the
digital channels offered arent user friendly.
Customers may jump

ship and go elsewhere if
they do not experience
a consistently satisfying
experience across digital
channels
The objective of any financial services enterprise is to

maximize margins by efficiently managing business processes
while simultaneously delivering customer satisfaction and
loyalty. To achieve this, enterprises are using the twin-pronged
approach of proactively consolidating disparate systems,
and leveraging digital technologies and platforms. Doing so
is helping enterprises attract and retain more customers, a
clear indication that a refocus on customer-centered digital
strategies can pay dividends.
Digital Transformation Framework
Digital Transformation
Impact of digital transformation on financial services

Competitive pressures, coupled with the customers give-me-more-for-less expectations, have created the right impetus for companies to reorient
their core strategies toward a broader series of channels, mostly digital. Many institutions have started working toward enhancing market share in
these new digital channels with a view to gaining a competitive edge.
Financial services enterprises that invested in advanced digital technologies are starting to reap significant benefits. The digital transformation
initiatives that have proven successful are typically focused on changing customer relationships and experiences, redefining value propositions,
and optimizing business models and processes.
In the financial services industry, digital transformation has been instrumental in driving changes in the following areas:
User
experience
In this digital era, consumers have become tech-savvy, socially active, and selective in their
purchases. They prefer products and services that are personalized, matching their tastes and
preferences. Self-service venues rule the day. Consumers search for information on the Web
and read online opinions and experiences posted by other users, all of which influence their
financial decisions to a large extent.
Business
processes
Because the marketplace has become more dynamic than ever before, standard business
processes have lost relevance in the digital era and are being replaced by adaptive processes.
For customers, the cost of switching to another bank is almost negligible. Therefore, to retain
existing customers and attract new ones, enterprises need proactive, customer-centric
processes. Enterprises have started building agile business processes so their design and
process changes can be handled quickly, in step with the changes in the market. This can
help reduce lead time for new product development and in addressing customer complaints.
Operating
model
Companies have started reshaping their boundaries by offering the same products and
services on their e-commerce and offline platforms. Moreover, the digital wave has not only
changed the way enterprises operate but also how employees work, communicate and
engage with customers.
Digital
transformation
challenges
While the business opportunities of digitalization are obvious, there are a number of challenges for enterprises
to overcomeand pitfalls to avoidon their transformation journey. The three areas mentioned above are the
building blocks of digital transformation.
Another critical challenge is deciding how far and how fast to traverse the digital journey. The answer lies in
adopting a differentiated digital transformation framework that can help address that challenge. The following are
some key issues that enterprises will need to address in the process of planning digital transformation.
Key challenges
Issues
Risks vs. benefits

Financial institutions are generally
skeptical about the benefits of digital
technologies and tend to think that the
risks involved outweigh the benefits.
Response
One of the best approaches is to thoroughly analyze how

well digital technology will fit in with the enterprises
processes and operations. The key determinants of
enterprise-technology alignment are reliability, performance
and compatibility with the existing IT infrastructure. The
implementation of digital technologies should be based on
cost-benefit analysis, value to the business, and potential
return on investment.
Privacy and security

In todays digital era, security and privacy
are major threats to the financial services
industry. Many financial enterprises
are wary of digital technologies for fear
of the reputational loss and financial
penalties involved in exposing or leaking
confidential information.
Effective authentication and monitoring mechanisms can

help achieve a high level of security for access to digital
channels. For instance, the implementation of multilevel
security tools, such as auto-wipe options in phones and
tablets to protect confidential information if the device is
lost or stolen, can go a long way in boosting mobility-based
security.
Infrastructure issues
The enterprises digital capabilities
depend on its IT infrastructure. The lack
of IT infrastructure and capabilities can
be a disadvantage in relation to digital
technology adoption.
Digital transformation will be easier if there is a strong bond

between IT the infrastructure and business functionality.
Consolidating operations and IT infrastructure can help
achieve this bond and enable execution of process changes
that are facilitated by technology.
Multichannel synchronization
The lack of coordination between
processes and customer touchpoints
can cause failure when adopting digital
technologies.
The enterprises vision should be clear and its strategy should

ensure that its online business complementsnot competes
withits offline business.
Integration issues
The integration of various processes
and operations is crucial to successful
digital transformation. The value derived
from digital transformation can be lost if
integration fails.
The integration of multiple processes should be effectively

handled, and managed. Channel conflict arises due to
coordination issues between new and traditional processes.
The new processes need to complement and work seamlessly
with existing processes.
To effectively embrace digital technologies, enterprises need a digital transformation framework that can clearly map their
offerings to the customers expectations. The framework should target all critical business areas and identify appropriate digital
technologies for successful execution.
Digital
transformation
framework
Value pillars
Value
pillar 1
Having a rigorous framework is the success mantra for digital transformation. Lets understand
how the digital transformation framework actually enables an organization to build tomorrows
financial services enterprise by going digital and helping them capitalize on that power.
The digital transformation framework, below comprises three value pillars. These pillars are
the disciplines that enable the enterprise to create customer value and, at the same time,
achieve a competitive advantage in the market. These value drivers are what make the digital
journey successful. Lets take a close look at each of these value pillars.
Customer
satisfaction
Customer satisfaction revolves around customers, their touchpoints, and experiences with
the enterprises offerings. This value pillar is about understanding customers, their needs and
preferences; and devising appropriate strategies to attract and retain them.
Iterative roadmap
There is an iterative four-step process, below for driving digital transformation and delivering a
user experience that is at once engaging and differentiated:
Engage with customers

all the way from
product discovery
to the point-of-sale,
by means of digital
content
Collaborate by
means of digital
communities
Personalize products
Offer products and

services across
multiple, integrated
channels
Iterative roadmap for customer satisfaction
Strategic initiative
The key strategic initiative to achieving customer satisfaction is getting social. Enterprises
can capitalize on their customers increased tech literacy and social activeness levels to build
meaningful relationships and create business opportunities.
Social networks enable institutions to engage and collaborate with customers, and facilitate
an enterprise to drive business through information-sharing and community-building. Online
communities bring together like-minded customers and make it easier for banks and insurers
to classify customers based on their preferences. An institution should leverage social and
networking websites like blogs, Wikis, Twitter and Facebook to collaborate with customers
outside their boundaries and resolve issues faster. This is a win-win situation for both,
customers and service companiescustomers overcome challenges and grow their businesses
while institutions build their customer base by offering financial products that match consumer
preferences and interests.
Institutions can use these interactive communities for advising clients, and building both brand
and loyalty bases. Social networks have made it easier for enterprises to:
Identify prospective customers through online digital marketing initiatives
Personalize offerings based on customer analytics
Provide multichannel delivery of financial products and solutions integrated with mobile
devices
Resolve customer problems with intelligent insights
The uniqueness of a bank or an insurers digital strategy in terms of how it addresses its
customers social inclination determines its level of competitive differentiation. Enterprises now
have an environment that actively supports the transition from being just listeners to actively
engaging and collaborating with customers to create long-lasting relationships for long-term
business sustenance. If implemented efficiently, the strategy can result in success for the
enterprise and customers. Satisfied customers often serve as social advocates, resulting in more
business for the company.
Case study
American Express OPEN Forum (www.openforum.com) is an online resource hub for
small business owners and entrepreneurs to communicate, collaborate and exchange
thoughts. Through Connectodex, members can share, promote and market ideas. The
Idea Hub feature offers perspectives from business experts in addition to encouraging
interactions, articles and discussion boards. In 2011, it had more than 200 contributors
and is now the leading resource for small businesses. Through this initiative, Bank of
America aims to help customers collaborate with other members and benefit from
experts advice while the bank itself gains a deeper understanding of the business needs
and imperatives of small business owners.
Value
pillar 2
Process
excellence
To cope with the changes in the market place in this digital era, its essential for financial
service enterprises to ensure faster implementation of new processes, so they can meet quality
standards and compliance requirements, while reducing time-to-market. For that, they need
to move from a functional to a process-oriented mindset.
Iterative roadmap
Business process management focuses on the ways and means to automate and optimize
operational practices. Below is an iterative four-step process for successful digital
transformation of business processes:
Model the business

processes
Build to automate
Optimize deviance
Manage and monitor
Iterative roadmap for process excellence
The key strategic initiative to achieve business process excellence is business process
management (BPM). BPM implementation can help enterprises create new avenues for growth,
increase process efficiency, and improve competitive differentiation. It creates an agile platform
and optimizes business processes, end-to-end. BPM implementation acts as an enabler in
the development of new products and services by reducing the time-to-market and costs,
improving customer service, and effectively managing compliance.
Some of the key processes for which financial service enterprises can leverage BPM are:
Regulatory compliance management: Regulatory compliance is an ever-increasing burden for
financial organizations. Enterprises are looking for ways to efficiently respond and adhere to
new regulations. BPM offers financial enterprises the visibility they need into their processes
as well as variability required to manage regulatory changes.
Customer case management: The concept of case management is gaining momentum among
financial service enterprises. Case management represents a powerful approach to manage
customer interactions across the customer relationship lifecycle. This enables enterprises to
surpass customer expectations and increase profitability by up-selling and cross-selling new
financial products.
New product development: An important factor that determines the success of a new
financial product is how quickly it reaches the market. Applying BPM in research and
development can ensure collaboration across processes while streamlining both processes
and tasks, thus helping speed the entire product development process.
Value
pillar 3
Operational
excellence
The operating model plays a significant role in achieving business excellence. With digital
technologies inexorably driving financial business online, it is critical for enterprises to extend
their boundaries by going digital.
The operating excellence paradigm focuses on the business model, customer engagements,
delivering products and solutions in online and offline formats, integrating offline and online
offerings, and optimizing the value chain across customer touchpoints.
Iterative roadmap
The following is a four-step process for building a successful operating model in the digital era:
Identify the costeffective channel
Design without
conflict
Leverage available
information
Integrate valuedelivery components
Iterative roadmap for operational excellence
The key strategic initiative to achieving
operational excellence is the cloud. Cloud
computing creates win-win situations for both
the firm and customer. From the customers
view point, it brings better user experience and
service while for an enterprise, transitioning to
the cloud reduces risk and helps achieve faster
returns on investment (ROI).
Some of the key applications that a financial
enterprise can move to the cloud are:
E-commerce
Analytics, including data mining, text mining,
and data warehousing
Business services, including customer relationship management, purchase trend analysis,
spend analysis, and loyalty management
Pricing and promotions, including price discovery, promotional timings, and channel
discovery
Social + BPM + Cloud:

Integration of strategic initiatives
is crucial
Digital transformation in the financial services has brought
significant changes for customers and for enterprise business
processes and models. To remain sustainable in todays digital
world, financial service companies must exceed customer
expectations, optimize and manage business processes
efficiently, and build a unique operating model that integrates
multiple channels. To achieve this collective objective, service
firms must integrate social networks, BPM, and cloud.
Cautionary note: To increase the likelihood of success, the
digital transformation journey should ensure that both
activitiesadopting digital technologies / platforms, and
implementing effective management of business processes and
the operating modelare undertaken hand-in-hand. Simply
focusing on going digital without proper BPM and robust
operating model can result in failure.
An interactive social network helps in winning customer
loyalty by creating a unique customer experience. BPM drives
process excellence by impacting business processes. The
cloud helps achieve operational excellence by influencing
the operational model. This BPM-cloud-social network
combination is a key enabler of business innovation.
What does the future hold?

Digital transformation in the financial services industry has built intense pressure on enterprises to redefine and rethink their interactions with
customers, business processes, and business models. Leveraging the full potential of digital technology is the new imperative before financial
service enterprises looking to gain a competitive edge in the market.
To fully exploit the potential business opportunities inherent in going digital, financial services firms need to build and execute a digital
transformation framework powered by digital platforms and technologies.
The adoption and integration of BPM, cloud and social networks can make the digital transformation journey profitable and successful for
enterprises. This digital trinity can help enterprises save costs, grow in scale, reduce time-to-market, and increase mobility, with the ultimate goal
of driving innovation around products to ensure market leadership.
References
l
John Dixon and Teresa Jones (2011),Hype Cycle for Business Process Management, Gartner. Available at:
http://www.adeptiacom/products/Hype_cycle_BPM_2011.pdf
Thomas Meyer (2006), Financial services 2.0, Deutsche Bank. Available at:
http://www.dbresearch.com/PROD/DBR_INTERNETEN-PROD/PROD0000000000201284.PDF
The New Digital Economy (2011). Available at:

http://www.transactionservices.citigroup.com/transactionservices/homedocs/the_new_digital_economy.pdf
About the
Author
He has more than four years of consulting experience helping clients

optimize their business processes and achieve operational excellence.
He is a thought leader and offers insight on the emerging trends in
mobility and social media and its impact on enterprise strategies
and business models. He has experience in business analysis,
business development, pre-sales and corporate blogging. Prior to
Infosys, he was associated with Computer Associates in new product
development. He earned his master of business administration
degree from BIM, Trichy.
He can be reached at saravanan_balaraj@infosys.com
Saravanan Balaraj
Senior Associate Consultant,
RCL Process & Domain
Consulting Unit
10
Other articles in this edition of FINsights

Like this
article?
Share it
with your
network
Serve them all,

serve them well
Multi-channel user
experience a banking
perspective
Banking on customer
satisfaction in a
digital world
Enhancing customer
experience with
immersive
correspondence
Putting a name to
a face
Monetization looking
at the future of
self-service banking
Using analytics for

insurance fraud
detection
More the merrier:

the hackers motto
s
Financial transactions
get personalized and
secure with biometrics
Go digital, reduce fraud

r
s
Financial institutions
reduce fraud risk with
social media
Reinventing bank
marketing with mobility
a
Delivering on the go
services for employees
and customers
Just what the insurer

5IFTPDJBMNBLFPWFSPG
wanted: a tabletized
UIFGJOBODJBMTFSWJDFT
futureJOEVTUSZ
Read previous
article
Digital transformation framework
Straight-through
processing
Read next
article
Digital transformation
11

Digital Transformation Framework

Uploaded by

Copyright:

Available Formats

Digital Transformation Framework

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Digital Transformation Framework

Uploaded by

Copyright:

Available Formats

How has the financial services industry changed in recent years?

How has the financial services industry changed in recent years?

What factors are driving financial institutions to adopt digital technologies?

What factors are driving financial institutions to adopt digital technologies?

Digital

Are you a financial services enterprise looking for

he financial services industry has undergone

Customers may jump

The objective of any financial services enterprise is to