Digital Transformation for Bank Boards

Online banking and contactless transactions have become an essential norm to keep banks running despite the mandated safety measurements during the pandemic. As digital innovation in banking becomes more and more recognized, it is now easier for financial institutions to streamline their operations.

More than half of the workforce of leading financial institutions like Bank of America, Wells Fargo, Standard Charter, and Nationwide insurance work virtually amid the pandemic. Some organizations have considered adapting to this permanently, while others opted for it temporarily.

While many confuse the term digital change with digital transformation, it is still vital to know their difference. Digital change only creates surface disruption. While it signals the start of digital transformation, it is not the end goal.

Meanwhile, digital transformation goes beyond technology and penetrates the organization’s structure, processes, culture, and the entire workforce. It is a modification that comes from the inside.

Bank boards play an integral role in successful digital transformation. To do so, leaders should partner digital banking with legacy leadership, encourage open collaboration, and continuously motivate learning. Here are tips on how you can execute these.

1. Partnering Legacy Leadership with Digital Banking

Studies have shown that many financial institution leaders are not digitally literate. In fact, only 25% of banks have at least three digital-savvy board members. As a result, misconceptions abound concerning digitization and digital transformation.

In order to promote effectiveness, digital transformation in the banking industry must be implemented, along with legacy leadership and culture in mind. This approach can guide work attitudes and behaviors, which is even more beneficial for fostering more effective and digital-savvy leaders.

Developing a digital banking transformation strategy should not unfasten legacy leadership and culture, as they are the institution’s backbone. Pulling them out also means neglecting the core principles and values that define your organization.

Having competent, digital-savvy leaders can create historical decisions linked to the financial institution’s digital progress. One common barrier for such transition is change management, wherein a good leader must be present. The goals and benefits of digital transformation must be communicated to everyone in the organization.

To avoid serious workplace conflicts, questions and concerns should be addressed before implementing the changes. If you are planning to integrate AI into the processes or use multiple digital channels, make sure all employees, and not just board members, understand the need for the transition.

Figure out what barriers are dragging the institution down and plan your bank’s digital transformation strategy from there. To boost chances of success, consider exploring more strategies that are also helpful for achieving good governance in financial institutions.

That said, board members must educate themselves on digital trends and technology. Directors can attend relevant conferences and network with digital natives. This helps them gain a holistic understanding of the best strategies to take risks. Plus, they can better communicate the why behind all decisions and disruptions to the entire organization.

2. Encouraging Collaboration

To fully incorporate digital transformation, bank leaders should cease to consider themselves the smartest people in the room. They must know how to encourage open collaboration, particularly when disruptions in processes and operations happen.

Keeping an open ear to concerns and suggestions gives another perspective on possible strategy limitations and details missed. Additionally, involving various aspects of the institution stimulates everyone to actively implement new strategies, adopt new technology, and engage in the digital transformation process.

Open collaboration also means that leaders let go of some control to empower their members and become more independent. Employees can confidently make quick decisions that keep up with the fast-growing pace of technology, which hierarchical systems would otherwise hinder.

This creates transparency and accountability and builds community among everyone. In return, the collaboration will help employees be more open and flexible to changes in the transformation process in the bank.

3. Pushing for Constant Learning

70% of bank employees believe their current technology hinders successful digitalization. Unsurprisingly, around 43% of banks use programs that date back to the 1950s.

Technology evolves at a rapid pace, so it only makes sense to continue learning, especially if your institution wants to experience the benefits of digital transformation in banking.

That is why leaders must approach transformation with a beginner’s mindset and let go of preconceived notions in favor of new experiences and ideas. Doing so makes room for innovation and breakthroughs that will give the institution a competitive edge.

Learning also means taking on emotional fortitude — that is, an openness to risks and failure. With this mindset, they understand that the transition does not happen overnight but takes months to years of development.

At the same time, emotional fortitude means leaders know when to pull back if a certain project or change no longer benefits the company. They can objectively discontinue it and learn from the failed step to better move towards better banking.

Disruption from the Core

If banks continue to focus on implementing change from the outside-in, they will never achieve digital transformation. Transformation is a mindset. It is not the technology that brings transformation but the people, particularly the leaders.

Without the steady steps of leadership during times of change, potential projects will be poorly executed, and modernization will be abandoned. Effective leadership ensures that cultures evolve, systems innovate, and people change for the institution’s betterment.

To take inspiration, learn more about companies that successfully achieved successful digital transformation.

Banks can greatly benefit from using a board portal to facilitate successful digital transformation. With Convene, bank boards can easily empower productive digital collaboration in the financial industry. This leads to more robust corporate governance, optimizing the decision-making process and maximizing board effectiveness.