As businesses lean on digital technology to drive their success, the question isn’t whether they need to embrace digital transformation but rather how they can do so effectively.
U.S. Bank recently conducted a survey of 1,420 financial leaders and found that many are focusing on cost reductions, and the most common way they plan to deliver on those savings is through investment in digital technology. U.S. Bank found that more businesses are leaning on digital technology to deliver transformative results, but many (45%) are still in the early stages of their digital transformation.
In a recent PaymentsJournal podcast, Vipul Kaushal, SVP of Product Transformation, Global Treasury Management at U.S. Bank, and Christopher Miller, Lead Analyst of Emerging Payments at Javelin Strategy & Research, explore some key findings from the study. They also delve into what businesses should consider before they pursue digital transformation, why empowering people to become part of the solution is key, and the crucial role automation plays in all of this.
Transforming Digitally
Fully leaning into digital transformation isn’t as straightforward as many businesses think. And before organizations take the leap, they need to work through some considerations.
“We need to make sure we involve the people who would be impacted by transformation,” Kaushal said. “And it’s also important to really understand the processes that would be looked at as part of the transformation itself.
“Then there’s the technology, where you look at the tools that will be the agents for these kinds of digital transformation.”
Particularly in the beginning, Miller said, organizations really focus on the people and processes—especially when technology can seem like the shiny new object everyone wants to get their hands on.
“I’ve heard it said that you really need to not fall in love with the technology solutions that you’re thinking about and instead think about the problems that you’re trying to solve,” Miller said. “That one in my experience has proven to be particularly challenging as digital transformation often ends up in the hands of technologists who must select the solution, design the solution, implement the solution, maintain the solution, and as a result they become very tied to that solution.”
Empowering People to Be the Solution
Ultimately, consumers are the ones who are most affected by digital transformation, and therefore it is critical for them to know how they would benefit from the changes companies are considering.
“This typically leads to a more successful level of digital transformation as opposed to just taking a problem and using a tool, digitizing it, and then just flapping it on to people to say: ‘Now use this,’” Kaushal said.
Even when consumers’ needs are considered before new technologies are implemented, it’s important not to forget the employees who will have to relearn the new technology and the systems that accompany it.
“It’s very important to have that trust with both sides, be it employees or be it customers—to make them understand why we are making the change and what would those impacts be,” Kaushal said.
Understanding the Role of Automation
As emerging technologies surface, businesses must fight the temptation to automate all their processes. Kaushal advises organizations to first pause and think about how processes can be simplified, especially if they have been in place for decades.
“I think a lot of times we spend too much time, too much money on automating a process
that might be an edge case,” Kaushal said. “You know of all the customer transactions we might do, let’s say some of the processes are accounting for 2 to 3% of that volume, and it’s a super complex process.
“So is there value in investing a lot of dollars in automating such a process while the value created out of it may not be a lot?”
Kaushal questions whether automation is the answer if it doesn’t translate into a significant value for the considerable amount of money necessary to implement it.
Miller said the desire to automate might remove a critical touchpoint that might present as inefficient on the surface. This touchpoint can be between employees or between customers and employees.
“Removing that touchpoint through automation results in an unforeseen loss,” Miller said. “Whether that’s an unforeseen opportunity for new business or an opportunity for risk reduction or a double check in the process that simply wasn’t even understood.
“That’s something to keep an eye on because there is value that can be hidden and lost if you take only an efficiency-driven mindset.”
Embracing Fear in the Implementation of Digital Transformation
Businesses must carefully examine the impact digital transformation could have on their employees, and not solely focus on growth.
Digital transformation can help organizations scale their opportunities, including those related to talent. By carefully outlining the end goal, Kaushal said, companies can ensure that people will be more willing to go along with the journey toward digital transformation.
“As leaders think through that change, they need to understand the impact it would have on the workforce, what kind of skills they would need in the future once the transformation is in place, which might be a very different mix than they started from,” Kaushal said.
“That’s where it leads to opportunities for existing people to upskill, or those people could move to someplace else. Or, after the digital transformation changes, we hire different types of people.”
A Step Forward
Ultimately, digital transformation is the key to unlocking the potential that every business has. It is the means by which businesses can remain competitive, forward-looking, and agile in addressing the evolving needs of their customers.
“Digital transformation is the driver behind these two pillars [delightful customer experiences and efficiency],” Kaushal said. “One is excellent customer experience, and the second is providing time and efficiency to both our customers as well as our internal employees.”
Although the entire process and journey toward digital transformation can be daunting for all parties involved, it will be beneficial for forward-thinking businesses to adopt digital transformation strategies to engage and delight not only the customers they have today but also those they hope to attract in the future.