Digital Transformation is More Than Lipstick on a Pretty Old Goat

By:  Husam Yaghi


The digital transformation of financial institutions is a dire need demanded by the new generation (Generation Z) who are glued to their hand-held devices. Because of the slow response to those demands, new fast moving players have entered the scene with impressive products.  No doubt conventional banks are worried and those who might not be concerned, should wake up and smell the roses.

The process of digital transformation is not easy. It requires a shift from legacy IT systems and traditional business models towards integrated, agile, customer-centric processes. Possibly more importantly, this transformation requires a cultural adjustment and mindset shift in application development and data flows.

Mistakenly, organizations believe that an improved digital experience begins with the consumer. They look at the delivery channel (online or mobile app) and believe the consumer will be satisfied if the app is well-designed and if some steps have been eliminated. Unfortunately, that is simply putting ‘lipstick on an old goat’.

Since legacy systems are incapable of supporting needs of Generation Z, conventional banks should partner with startups to facilitate the innovation and changes needed.  Rather than trying to wipe out those fintech startups, incubate them or begin the relationship with small projects. Blockchain technologies will also aid the transformation, providing functional, domain and regulatory support.

What banks should fear is those large technology firms such as Google, Amazon, Facebook and Apple, Alibaba and Uber.  These TechFins already have hundreds of millions of loyal customers; and they easily could start offering them financial services.


Imagine when those TechFins turn to artificial intelligence and machine learning to deliver their financial services.  Some of the immediate advantages over conventional banks could be the following services:  Recommendations/advice: monitor account ownership, behaviors, and social media insight to recommend best-suited products and services. Alerts: inform consumers about potential fraud, investment opportunities in alignment with past behavior.  Predictions: monitor past financial behavior and understand current and future activities, then predict future consequences as opposed to simply providing post-transaction insights.

To digitally deliver an exceptional customer experience, an organization must build from within, engaging all functional areas and stakeholders, to ensure a seamless and easy journey from shopping to purchase to use. This includes looking at all back-office processes and data flows to make sure they are in alignment with what is required by the digital consumer.

Organizations need to build for ‘digital’ as opposed to ‘mobile’ or ‘online’. Organizations also need to accommodate different demographic expectations based on age, income, etc.