The drive to digital: Re-skilling is the new black
Senior executives in the financial services sector are focussed on one theme: the need for digital transformation. Gartner confirmed this in its 2018 CIO survey. Of course, digital transformation is a means to an end – not an end in, and of, itself. The goal is to create a business that uses digital tools, talent and expertise to massively improve the customer experience, increase responsiveness and drive innovation and insight.
At Avanade, we’ve found that successful business leaders are using the transformation journey to create smarter organizations, ones that predict and lead in their markets, rather than react and follow. We call it the ‘Intelligent Enterprise’ and digital re-skilling is one of the major characteristics of this kind of organisation.
But there are several things standing in the way of making this kind of a transformation.
- There is a lack of digital skills and tools. By 2020, IDC cites that only 25% of Global 2000 companies will have developed digital training programs and environments to compete more effectively in the drive to acquire talent.
- There is a lack of the business insight needed to innovate for industry differentiation. By 2019, IDC reckons 40% of digital transformation programs will be supported by cognitive/AI capabilities. And a recent Accenture study estimates that for banks, which embrace intelligent automation at the same rate as top-performing businesses, revenues could rise by 34% by 2022 and employment by 14%. But – and here’s the rub – only 26% of their workforce is ready to work with these technologies and only 3% plan to significantly increase their investment in reskilling programs in the next three years. For insurers the figures are 25% and 4% respectively.
- Financial institutions recognize that modern software engineering (MSE) tools will substantially help in digital transformation. In fact, 90% of financial institutions agree that MSE is key in addressing the emerging requirements of the digital business. This includes DevOps teams, agile app development and/or a cloud-first approach. 61% say it can lead to improved SLA performance and four out of ten believe it can assist with rapidly deployed innovation and cost reduction. However, two-thirds struggle to find investment, while up to 70% report a lack of skills in DevOps delivery or agile development and need third-party expertise.
Those banks who have pioneered digital transformation have focussed on re-skilling as a major pre-requisite for growth. BBVA, for example, invested €40mn a year in the selection and training of its staff and has built an e-learning platform that has delivered 3 million hours of courses. In addition, DBS created a ‘Digital Institute’ to train staff in digital awareness, coding, design thinking, data analytics, UX and digital marketing, as well as setting up hackathons to generate an entrepreneurial spirit across the 22,000-strong enterprise.
So, is this ‘intelligent enterprise’ a rarity, and just for a few banks who have been investing in transformation for the last decade? We think not. Digital realization means having the right talent, tools and experience to create business technology solutions. It offers companies the chance to predict rather than react to market challenges. Here are some actions we think banks must take to be considered an industry transformer:
- Give staff the digital tools they need and invest in their digital development
- Identify emerging issues that will impact your business and enable your teams to exploit those opportunities
- Focus on training in areas such as DevOps and agile approaches
- If you want to move quickly, consider using third-party providers to get you started
One major European bank created a new customer segment and wanted to build new apps for this group using intelligent cloud and MSE approaches. This would enable faster response to market change and the ability to automatically deploy software releases at higher quality. Using our agile/DevOps expertise, a Microsoft Azure PaaS and Avanade’s Modern Engineering Platform approach, we minimized the investment needed. There was virtually no ramp-up phase, which allowed the team to build applications in days. This meant faster time-to-market, higher levels of performance and faster concept-to-cash time.
The intelligent enterprise is not a theory. Many banks are discovering the value of enabling staff with digital skills to help them predict and lead in their chosen markets. Are you?