There is still a significant confusion around the business case of digital transformation. Most financial institutions think that digital transformation is a cost. It is important to realise that digital transformation is an investment to future-proof the institution.
The International Finance Corporation (IFC) identifies the impact of digital transformation as
1) reduction in the cost per customer
2) customer growth
3) cost-to-income differentials
4) new sources of value.
Digital transformation requires a strategic focus on user-centric design, alternative data analytics, personalised experience, robust technologies, and fully automated processes. Against this backdrop, a significant number of FSPs are under-prepared and ill-equipped to make use of digital financial services to retain their market share.
An institution’s digital transformation strategy is anchored on the use of technology to:
1) enhance its business model
2) expand its scope to offer financial services to other segments than those it traditionally served
3) increase its scale and outreach
4) enhance efficiencies of operations
5) manage risks effectively
The key pillars of digital transformation strategy design include six areas:
Founder – Transform Partner