WIXLIB

For EBusiness & Channel Strategy ProfessionalsDecember 24, 2018Organize For Digital Banking SuccessOrganization: The Digital Banking Strategy PlaybookDigital Governance Encourages Customer-Obsessed Actions, Not Red TapeBank employees sometimes see governance as an endless procession of hoops they need to jumpthrough to make things happen.11 In fact, effective governance plays three crucial roles to help digitalteams move faster. First, governance ensures a proper alignment between strategy and executionby ensuring that all digital activities tie back to strategy. Second, it allocates resources, drivescollaboration, standardizes processes, ensures consistency, and prevents redundancy in pursuit ofhigh-quality CX and operational agility. Finally, digital governance has risk management and securityat its core, so that neither the bank’s safety nor that of its customers is ever compromised. To ensureeffective governance, successful digital banking leaders:›› Use collective planning sessions to embed customer focus and prioritize initiatives.Think of these sessions as a town hall where teams get together on a weekly basis to reviewthe performance of past releases and features and decide on priorities for the following week,combining bottom-up and top-down activities.12 Each idea coming from delivery teams needs to bestructured in the same way, providing a high-level description of the complexity and effort requiredand detailing the expected impact on business and customer metrics. Tolga Ulutaş, executive VPof direct banking at Turkey’s Akbank, explains this prioritization process as “The better the idea, thebigger the impact, and the more resources.”›› Have a steering committee to maintain executive alignment. A steering committee helps tokeep all of the bank’s senior leaders involved in executing digital banking strategy, rather thanseeing it as someone else’s problem. The top-down approach is also important to have the rightmix of initiatives balancing innovation, security, and system performance. A steering committee ofbusiness and technology leaders gather monthly for top-level governance, strategic alignment, andbudget allocation.›› Devolve decision making to increase speed. At the core of day-to-day governance are two rolesthat continuously interact with each other: product and delivery managers. Product managersare ultimately responsible for owning the product vision, getting the functionality right, andtranslating business strategy into products that delight customers, so there’s a stronger senseof accountability for functional decision making. Delivery managers — or Scrum masters in Agileterminology — are part of a project management office, keep the team accountable to businessgoals, and remove potential roadblocks. They are coaches who ensure that the delivery movesalong at the right pace. Both managers must be insights-driven, unbiased, use customer anddelivery data to inform decisions, and avoid subjective discussions.›› Define guardrails rather than strict rules to allow for flexibility. Digital governance is abalancing act. Too much command and control can stagnate decision making, but devolutionwithout common guidelines can lead to chaos. According to Akbank’s Ulutaş: “This is a livingorganism. What is planned for the next quarter might not be true. Customers, competition, andregulation also affect this list of priorities. So you need flexibility.” Guardrails provide this flexibilityby defining the boundaries within which digital teams manage themselves. They allow teams to 2018 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.Citations@forrester.com or 1 866-367-73784

For EBusiness & Channel Strategy ProfessionalsDecember 24, 2018Organize For Digital Banking SuccessOrganization: The Digital Banking Strategy Playbookmake decisions and implement ideas quickly while protecting the interests of the bank and itscustomers. Guardrails must make clear who has the right to make decisions and when and howescalation is required.13›› Measure progress against customer outcomes. Metrics that measure how the bank is servingcustomers ensure alignment between strategy and execution. An independent analytics teamchecks the actual performance of a feature after launch to see if it delivered what was intended anddocuments this feedback to inform prioritization decisions for further releases or features. Digitalleaders must measure different teams and roles on a common set of key performance indicatorsthat encompass business results and CX objectives.14 The feedback mechanism also helpsevaluate teams’ ability to set realistic expectations and deliver against them. Scotiabank formalizedhow it measures progress, focusing on the volume of activities like migration, acquisition, andretention and CX quality and cost.15Digital Execution Requires Clarity Of Role And PurposeThis is where digital banking strategy comes alive. The scarcity of digital skills makes assemblingdelivery teams with the right capabilities a challenge for most banks. The head of digital for a largeUS bank told us: “I wouldn’t have started on the tech component; I would’ve started on the peoplecomponent. If you don’t have the right talent, having the right technology is not good enough.” Digitalteam members need clarity on their respective roles and responsibilities, collaborative and iterativeways of working, and a strong sense of purpose. Successful digital banking leaders:›› Establish four core digital roles with clear responsibilities. The four key roles on the digital teamare business strategy, design, technology, and analytics (see Figure 2). The business role is playedby a product manager who excels at user-centric product design and can rally teams of engineersand designers to build delightful products. The design role brings the CX, UX, and interactive designskills necessary to ensure that banking services are usable and consistent across touchpoints.Technology roles bring the functional design element and evaluate the technical feasibility of ideas.The analytics role keeps a finger on the pulse of the internal and external performance of the teamand products, keeping everyone honest on the progress made (see Figure 3).›› Develop a fast, connected operating model with limited handoffs. The only path to digitalbusiness is tight collaboration between business, CX, and technology pros. This needs to happenat the delivery unit level for speed and quality. While team shape and size will vary, the goal is tobreak down structural and physical silos, limit handoffs, and make cross-functional teams moreagile.16 BBVA has adopted Agile and Scrum methodologies for application development anddelivery in channels. Banks like Poland’s ING Bank Śląski have even implemented a BusDevOpsapproach with a mixed team of analysts, developers, and businesspeople developing andmaintaining applications throughout their life cycles. 2018 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.Citations@forrester.com or 1 866-367-73785

For EBusiness & Channel Strategy ProfessionalsDecember 24, 2018Organize For Digital Banking SuccessOrganization: The Digital Banking Strategy Playbook›› Use customer journeys to guide digital banking execution. To design, deliver, and fine-tune digitalproducts and services, digital banking teams must follow a disciplined, customer-focused processthat aligns stakeholders behind a clear business strategy and enables cross-functional, iterativeexecution of the bank’s vision. Digital banking teams should use customer journey and ecosystemmaps as a unifying methodology to help prioritize and build great banking customer experiences.›› Foster a customer-obsessed mindset for a common sense of purpose. Developing acustomer-centric mindset takes time. Start by sharing a common vision of the intended CX so allteam members understand what “good” looks like from a customer point of view.17 Digital bankingleaders use diverse strategies to nurture customer empathy within their teams. Singapore’s DBSBank regularly uses videos of interviews with customers to dispel potential misunderstandingsabout what the real problem is. These videos help reset team members’ assumptions aboutcustomers and act as a powerful tool to shape idea generation sessions and business cases. 2018 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.Citations@forrester.com or 1 866-367-73786

For EBusiness & Channel Strategy ProfessionalsDecember 24, 2018Organize For Digital Banking SuccessOrganization: The Digital Banking Strategy PlaybookFIGURE 2 Core Digital Banking RolesDomainFunctionsBusiness strategy Product management Demand generationDesignTechnologyAnalytics User experiencedesign Consumer behaviorsResponsibilities/tasks Own and manage the digital product/service orcustomer journey Interface with the bank’s customer or productsegment lead Oversee marketing and communications for digitalbanking products and services and ensure that theystay “on brand” Suggest ideas for new products and services Create the business case Drive adoption of existing products and services Design future-state customer journey maps Design and evolve personas Design and field ethnographic surveys Identify opportunities for usability improvements Conduct usability testing Functional expertise Define content and functionality requirements Applicationdevelopment Build digital products and services or interface withdevelopers Interface with technology teams to gain access tocore business systems and capabilities Guarantee the respect of digital and enterprisearchitectural choices Identify opportunities for functionality improvements Measure the performance of products, customersegments, and marketing campaigns Run improvement experiments (multivariate and A/Btesting) Track customer interactions to understand digitalbehaviors Measure digital team process efficiency Data science 2018 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.Citations@forrester.com or 1 866-367-73787

For EBusiness & Channel Strategy ProfessionalsDecember 24, 2018Organize For Digital Banking SuccessOrganization: The Digital Banking Strategy PlaybookFIGURE 3 Other Digital Banking RolesRoleGoalsHead of digitalbanking Articulate the digitalvision Create and articulate the digital banking vision in linewith the bank’s business strategy Deliver businessbenefits Define business objectives Own P&L or shadow P&L for products and servicesmarketed through digital touchpoints Portfolio management: Make kill-or-grow decisionsbased on product performance Drive a customer-obsessed culture in the digitalorganization Keep track of digital team performance Assemble cross-functional digital teams Ensure that there is a sufficient backlog ofdevelopment ideas Run steering committees to prioritize subsequentdevelopments AKA “Scrum master” in Agile project management Scan and assess markets Manage relationships with the fintech ecosystem Assess the business value of new solutions Find internal sponsors or incubators to pilot andeventually scale the solution Manage alliances Roles like operations, security, legal, risk, compliance,and HR can be dedicated inside the digital bankingorganization; in that case, they act as an interfacewith those functions within the bank Dual reporting line to the head of digital banking andrespective functional headsManage deliveryProjectmanagementofficeInnovationScout for and assessfinancial technology(fintech) partnersAncillary roles likeHR, security, risk,and complianceDepending on the size ofthe digital bankingorganization, these canbe dedicated rolesResponsibilities/tasks 2018 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.Citations@forrester.com or 1 866-367-73788

For EBusiness & Channel Strategy ProfessionalsDecember 24, 2018Organize For Digital Banking SuccessOrganization: The Digital Banking Strategy PlaybookEvolve Your Organizational Structure To Promote Digital MaturityOnce you have the building blocks of the digital organizational structure in place and can show thebenefits of such an organization in terms of speed, agility, and business and customer value, thenext step is to break down traditional functional silos in favor of a leaner, more agile structure thatencourages cross-functional collaboration and teamwork on behalf of customers (see Figure 4). Thisis a key part of the bank’s digital transformation journey. As the head of strategic transformation atPoland’s Bank Zachodni WBK explained: “It would be wrong to think that there is an end date on ourdigital transformation. We will never go back to how we used to work.”18 2018 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.Citations@forrester.com or 1 866-367-73789

For EBusiness & Channel Strategy ProfessionalsDecember 24, 2018Organize For Digital Banking SuccessOrganization: The Digital Banking Strategy PlaybookFIGURE 4 Scotiabank’s Cross-Functional TeamsDesignApp-devProductCXAnalyticsCXDigital initiative 1Design (e.g., new single-purposeapp, recommendationengine, updatedAnalyticsproduct API)CXDigitalinitiative ional leadership duoDigital Designinitiative icsDigitalinitiative 2DesignAnalyticsCXDigitalinitiative 4ProductApp-devCXApp-devDesignDigitalinitiative 5DesignDigitalinitiative ics 2018 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.Citations@forrester.com or 1 866-367-737810

For EBusiness & Channel Strategy ProfessionalsDecember 24, 2018Organize For Digital Banking SuccessOrganization: The Digital Banking Strategy PlaybookChange Your Organizational Structure To Accelerate Digital TransformationBanks like Akbank in Turkey, DBS Bank in Singapore, ING Bank in the Netherlands and Poland, andRoyal Bank of Scotland (RBS) in the UK understand that cultural change is the main challenge oftheir digital transformation.19 While cultural change takes time, these banks see a new organizationalstructure as a way to accelerate digital transformation because it helps immerse employees in the rightwork environment and change their ways of working. These banks:›› Create new reporting lines and roles. Old habits die hard.20 Encouraging cross-functionalcollaboration while keeping the same hierarchies and governance structure in place can feel liketrying to change the shape of a memory-foam mattress — whatever force you apply, it alwayscomes back to the original shape. A new organization helps change deeply ingrained habits byintroducing new roles and reporting lines with a renewed clarity of purpose. In 2016, ING BankŚląski in Poland executed an ambitious transformation of its organizational structure based on theAgile transformation of ING Bank in the Netherlands. It merged the IT, business, and operations ofthe retail bank into one agile organization of 600 people to bring innovations to customers faster.21›› Develop new processes. Simply relying on training and education to mold your existing employeesinto a digital workforce that uses new methods like design thinking and Agile development willonly take you so far. Once employees complete the training, most revert to their old ways. A neworganization immerses employees in digital processes and methods and helps them develop newhabits. One digital leader we interviewed talked about “re-habiting” employees by immersingthem in a new organization. Justyna Kesler, COO at ING Bank Śląski, told us that the new agileorganization forced it to revise processes across the bank: “The ways of working needed to change— but also all of the banks’ procedures, including strategic planning, budgeting, and HR.”›› Build new environments. Leading banks understand that a new work environment is a catalystfor changing culture. Banks like National Australia Bank, Scotiabank in Canada, and BBVA inSpain built new work environments in which business execs collaborate closely with technologyand CX colleagues to create, incubate, and implement new digital product and services.22That puts people in a different work environment at the same time as they get new roles andresponsibilities. Jeff Marshall, former head of cross-functional digital factory teams at Scotiabank,told us: “We rented a temporary space and threw up some whiteboards and Wi-Fi and it worksquite well. The old corporate offices are the meeting rooms. Just knocking down some walls is areally great place to start.”23Choose Your Structure Based On Your Digital MaturityThe bank’s organizational structure will evolve following a strategy that must be inherently dynamicto adapt to changing customer needs. Eventually, banks will have to reinvent themselves to offer newvalue propositions as part of wider digital ecosystems (see Figure 5).24 Moving to this state of end-toend transformation will require a federated digital organization to scale digital functions while ensuring 2018 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.Citations@forrester.com or 1 866-367-737811

For EBusiness & Channel Strategy ProfessionalsDecember 24, 2018Organize For Digital Banking SuccessOrganization: The Digital Banking Strategy Playbookconsistent quality across the bank. This will take years and needs to follow an iterative approach.25 Ininterviewing banks for this research, we identified three main phases in the transformation strategy andtheir related organizational structure:›› Tactical transformations are decentralized. This is the first, uncontrolled stage. Individualdepartments like marketing, customer service, and eBusiness build their own digital assets in theirown way for different purposes. They prioritize short-term cost savings and efficiency improvementobjectives rather than overarching business or CX goals. The lack of a shared digital strategyresults in a high cost of ownership and a failure to share and reuse best practices. A large bank inSingapore has its mobile and online banking teams reporting to the head of retail banking, whereasthe public website and digital marketing teams report to the head of channels. Our research showsthat such decentralized organizations are indicative of low digital maturity.26›› A central structure enables a functional transformation. Adopters, driven by an urgency toaccelerate their digital initiatives, move to a centralized model. “We realized that we had to bringeverybody together under one roof if we wanted to be best in class,” said the head of digital ata large US bank. The digital team is usually part of the retail banking business, as this is whereempowered customers’ expectations of digital are the highest. The head of digital banking triesto ring-fence digital resources and create a digital banking organization with two main objectives:digitizing customer-facing processes via mobile and online banking and accelerating the creationof a digital workforce with the right skills and roles. A growing number of banks are willing torestructure their organizations to achieve those objectives.›› A federated structure scales digital in an end-to-end transformation. Forrester believes that adistributed model, where digital resources live within business functions, is the way for customerobsessed businesses to organize. The digital banking organization’s role shifts from managingdigital touchpoints to enabling the end-to-end transformation of the bank. Few banks have reachedthis level of strategic intent, where digital transformation is elevated to a C-level function and theCEO drives the entire bank’s digital business transformation.27 BBVA chairman and former CEOFrancisco Gonzalez and Santander chairman Ana Botin have put energy and resources into thedigital transformation of their banking groups.28 2018 Forrester Research, Inc. Unauthorized copying or distributing is a violation of copyright law.Citations@forrester.com or 1 866-367-737812

For EBusiness & Channel Strategy ProfessionalsDecember 24, 2018Organize For Digital Banking SuccessOrganization: The Digital Banking Strategy PlaybookFIGURE 5 The Scope Of Digital Transformation Initiatives Mirrors Banks’ Own Digital MaturityDigital transformation journeys proceed through three phases20172018Number of atetime-to-market, improvedigital CXAccelerate time-to-market,improve digital CXBusiness reinvention:sustainable, long-termcompetitive advantageScopeTeam/department levelDigital function, usuallywithin the retail businessunitEnd-to-endAccountabilityHead of departmentUsually the head of retailbanking; sometimes theCOOCEOInvestmentMinimal (hundreds ofthousands of dollars)A few million dollarsSignificant (up to severalbillion dollars)Operating leversSingle, usuallytechnologyMainly processes, skills,metrics, and technologyCulture, organization,metrics, processes,technology, ski

Organization: The Digital Banking Strategy Playbook customer-obsessed transformation journey. The head of digital banking must communicate this vision to the entire bank, helping departments understand the impact of digital technologies on different parts of the business. Three years into its