Reinvention: the lessons banks can learn from Bowie and Madonna

 When we think of reinvention in popular culture, it’s hard not to think of Bowie and Madonna.

We’re four decades into the chameleonic Queen of Pop’s career, but there’s one thing that Madonna has never been: uninspiring. To this day, her 1984 MTV VMAs performance remains one of pop culture’s most infamous and legendary moments. Through the countless albums that followed, Madonna has maintained her status as one of the prototypical inventors of pop reinvention, refusing to “stay in her lane”.

Then take David Bowie, four years after the amazing triumph of The Rise and Fall of Ziggy Stardust and the Spiders from Mars, Bowie moved to Berlin, and went undercover. He only surfaced again in response to the emergence of punk. From here on in, Bowie would reinvent himself every 18 months or so.

Madonna or Bowie quickly and consistently reinvented themselves to adapt to change and stay relevant.

What does any of this have to do with banks I hear you cry? Bowie and Madonna were masters of reinvention to maintain relevance. They understood there was a shelf life to Like a Virgin or Ziggy Stardust. And that continuous reinvention, rather than revolution, is the key to success.

Banks must be anchored in the present just like Bowie and Madonna. They need to reinvent themselves to remain relevant to the actuality of society – whether political, economic, social or technological. And like Bowie and Madonna they must build a platform for this continuous change.

Digital vs. digital native  

To better compete and improve operational efficiencies, financial institutions large and small have embarked on digital transformation journeys. However, for many the journey has no clear end-goal and with limited returns to date, transformation has stagnated.

Data from IDC revealed that 70% of all digital transformation initiatives did not reach their goals. And of the $1.3 trillion that was spent on digital transformation in 2018, more than $900 billion went to waste. As pressure mounts to deliver services that are digital, data-driven and easily connected to third-party networks and applications, institutions face “death by digital transformation”.

The problem? There is a big difference between “digital” and “digital native”. Rather than seeing the internet and mobile revolutions as exactly what they are – revolutions – banks are simply using digital as channels or add-ons, not game-changers that rewrite the rules of the industry.

Institutions have simply replicated a transaction-centric banking business model and technology architecture in a digital environment. This represents a huge missed opportunity.

Technology literacy

Fintech influencer, Chris Skinner, recently wrote a blog on the difference between “cloud-based” and “cloud-native”. Skinner cites Ravi Kittane, Financial Services Technology Consulting lead at PwC Malaysia, who said that the reason banks’ digital transformation efforts fail is for three reasons:

• Lack of alignment between top-level management, transformation teams and teams deploying the new capabilities
• Failure to automate end-to-end business processes (such as customer onboarding, account opening) resulting in fragmented solutions
• Inability to build organisational capabilities and talent to sustain continuous development beyond initial proof of concepts

Even further, Skinner believes that the reason why 70% of all investment in digital is wasted by banks, and the reason why the likes of Bó never live up to expectations, is because a bank doesn’t see technology as core to its mission. Rather it is simply a means – a means to deliver services or support customers.

So, we have a dilemma. Banks need to digitise to survive but they struggle to do this effectively on their own. What should they do?

Put data at the core

The answer rests in data, banks must put data at the core. Data is information, used correctly it is insight. And banks have incredibly valuable data. They know what consumers buy, where they buy it, and when. This data is the foundation for reinvention and allows banks to quickly build and become what customers and prospects want and need.

The awkward truth is that for most banks it’s less about having a state-of-the-art tech capability with an army of developers. It’s about giving employees, customers and partners the ability to imagine and create new products and services. By putting data rather than tech capability at the core, institutions can focus on extracting value from existing systems and creating and automating new data flows and value paths.

This is much more sustainable than on legacy rip and replace. And there are three key aspects to this:

• Becoming data-driven: Big tech companies are setting the pace of change, harnessing swathes of data to continuously deliver new and better services and experiences. Banks are also sitting on a data goldmine, but aren’t putting it to use. To compete, they need to build an API economy integrated with internal and external data sources to drive automation and personalisation. This results in unique customer experiences based on a “single source of truth”.
• Adopting automation: Many banks have a general understanding of their customers and/or customer segments. But few have a deep understanding at the individual customer level. Operationalising the use of customer data to form actionable insights that inform the customer conversation in real-time, across all touchpoints, is dependent on automation. Only by driving automation can institutions deal with data at scale to deliver personalised, seamless user experiences while dramatically reducing operational costs.
• Empowering customers and employees: Banks don’t just need “technology”, they need technology that empowers their business at all levels – from operations and management through to staff, agents and their customers. Technology must deliver the seamless and frictionless omnichannel journeys that users want while providing their teams with the operational tools to support and deliver them, irrespective of location.

This isn’t about building a new mobile app or launching a marketplace with fintech partners. This is laying the foundation for continuous change, for constant reinvention where products make way for customer journeys that are built and modified in real-time based on data. Those journeys are created, personalised and scaled using automation. And this can all be driven by employees and customers without the need for IT expertise.

Reinvented and ready to change

This isn’t about a single revolution or a long term evolution – banks need to continuously reinvent themselves. To date, institutions have simply replicated a transaction-centric banking business model in a digital environment, rather than embracing digital in open arms and shifting towards a data-centric approach.

Banks need to be less like revolutionary Napoleon, or evolutionary theorist, Darwin, and more like Madonna or Bowie who quickly and consistently reinvented themselves to adapt to change and stay relevant.