The Banking Executive - Decemebr 2021, Issue 156

ISSUE 156 DECEMBER 2021 the BANKING EXECUTIVE 19 The First Banking Executive Online Conference 2021 economic activity. • Supportive financial conditions. Major central banks are assumed to maintain their current policy rate settings throughout the fore- cast horizon to the end of 2022. • Rising commodity prices. Risks of the Outlook Although new restrictions following the surge in infections suggest growth could be weaker than projected in early 2021, other factors pull the dis- tribution of risks in the opposite di- rection. • On the upside, further favourable news on vaccine manufacture (in- cluding on those under develop- ment in emerging market economies), distribution, and ef- fectiveness of therapies could in- crease expectations of a faster end to the pandemic than assumed in the baseline, boosting confidence among firms and households. • On the downside, growth could turn out weaker than in the base- line if the virus surge (including from new variants) proves difficult to contain, infections and deaths mount rapidly before vaccines are widely available, and voluntary distancing or lockdowns prove stronger than anticipated. Slower- than-anticipated progress on med- ical interventions could dampen hopes of a relatively quick exit from the pandemic and weaken confidence. II. DIGITAL TRANSFORMATION Digital transformation is the integra- tion of digital technology into all areas of a business, fundamentally changing how we operate and de- liver value to customers. It's also a cultural change that requires organi- zations to continually challenge the status quo, experiment, and get com- fortable with failure. The four domains in Digital Transformation. • Technology From the Internet of Things, to blockchain, to data lakes, to artificial intelligence, the raw potential of emerging tech- nologies is staggering. And while many of these are becoming easier to use, understanding how any particular technology contributes to transformational opportunity, adapting that technology to the specific needs of the business, and integrating it with existing systems is extremely complex. • Data The unfortunate reality is that at many companies today most data is not up to basic standards, and the rigors of transformation re- quire much better data quality and analytics. Transformation almost certainly involves understanding new types of unstructured data (e.g., a driver-supplied picture of damage to a car), massive quanti- ties of data external to your com- pany, leveraging proprietary data, and integrating everything to- gether, all while shedding enor- mous quantities of data that have never been (and never will be) used. • Process Transformation requires an end-to-end mindset, a rethinking of ways to meet customer needs, seamless connection of work activ- ities, and the ability to manage across silos going forward. • Organizational Change Capability In this domain we include leader- ship, teamwork, courage, emo- tional intelligence, and other elements of change management. Pulling It All Together So far, we’ve discussed the technology, data, process, and organizational change capability domains as if they existed in isolation, which of course they don’t. Rather, they are part of a larger whole. Technology is the engine of digital transformation, data is the fuel, process is the guidance system, and organizational change capability is the landing gear. You need them all, and they must function well to- gether. Finally, work on technology, data, and process must proceed in an appropriate sequence. It is generally accepted that there is no sense au- tomating a process that doesn’t work, so in many cases, process improve- ment or reengineering must come first. Five Key Lessons: 1. Figure out your business strategy before you invest in anything. Leaders who aim to enhance or- ganizational performance through the use of digital tech- nologies often have a specific tool in mind. “Our organization needs a machine learning strat- egy,” perhaps. But digital transfor- mation should be guided by the broader business strategy. 2. Leverage insiders. Organizations that seek transformations (digital and otherwise) frequently bring in an army of outside consultants who tend to apply one-size-fits- all solutions in the name of “best practices.” Rely instead on insid- ers — staff who have intimate