How Banks Can Boost Their Digital IQ

by Sohini Bagchi    May 21, 2014

digital IQ

Digital banking is the latest buzzword in the banking industry. The banking sector globally is already conducting several of its transactions over online and mobile channels, and this will increase manifold in the coming few years, according to PwC’s sixth annual Digital IQ Survey.

Mobile as a digital tool

The PwC study reveals that mobile technology is playing the biggest role in bank’s digital transformation. For example, mobile is not just used in mobile banking and payments, but is used as a ubiquitous business tool. The challenge now is to figure out the next step for mobile banking in terms of customer expectations and technical capabilities, it says.

“The mobile has been a big game changer. It has been the most disruptive technology in the last several years,” says banking evangelist Brett King. “If one has to enable financial inclusion in India, it has to be done through the mobile, and not by opening more branches. Countries like Kenya, Indonesia and Philippines have proven that you don’t need more bank branches for financial inclusion. You have to move on to the mobile,” he says.

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Digital behaviors

The study shares five digital behaviors that are crucial for banks to boost their digital IQ in the changing landscape

CEOs proactively  championing digital: Nearly 81% of the top performers across all industries say their CEO is an active champion in the use of IT to achieve business strategy, says the study. A recent McKinsey report also highlights that CEOs must make some critical decisions related to digital strategies in their organizations. While he can delegate tasks to CIOs and CDOs, he should proactively drive these strategies, keeping in mind digitization is a moving target, says the report. 

Strategic CIO-CMO collaboration: Seventy percent of top-performing banks say they have a strong CIO-CMO relationship. Another Forrester report also shows that organisations must adopt a comprehensive strategy that touches senior leadership right through to employees, if they’re to secure sustainable and valuable relationships with digitally savvy customers. 

“To succeed in the future, marketing must combine its strengths with those of the tech management team to establish both world-class digital customer experience and digital operational excellence,” says Forrester senior analyst, Nigel Fenwick. 

Combining in-out approach to digital innovation: According to the study, top performers supplement the traditional internal sources of innovation with outside sources such as research labs, universities, analysts, and vendors.

Read: Banks Will Have to Reinvent Their Services

Investing in new platforms: This includes investing in processes, architecture, organization, and governance, with IT evolving into a “services orchestrator” instead of a centralized authority. For example, banks are moving beyond security and cost efficiency and are embracing the cloud platform as a means to achieve agility, speed and responsiveness.

Viewing digital as an enterprise capability: “Digitally savvy resources” must be woven throughout the business, not centralized in a single function, according to the PwC report, which suggests that digital will define the ways employees work and the ways customers receive payments, services, and communications. As the report mentioned having a high digital IQ is about building a culture and sense of mission, not just implementing a project.

Achieving a high digital IQ requires significant investments in technology, major mind-set changes, and process transformation, and this is something banks and financial institutions will strive to achieve in the coming days, says the study.