Q&A: How FinServs Can Cut Costs and Drive Efficiency With Automation With James Sattler From BCG
Gayan Benedict and James Sattler discuss The Reset, the latest report from Salesforce and BCG, and uncover how Australian financial services organisations can cut costs, boost productivity and enhance internal efficiencies and drive a successful digital transformation.
In collaboration with Boston Consulting Group (BCG), Salesforce recently released a report called The Reset, which charts how Financial Services can accelerate the business value of technology, drive digital transformation and tap into the benefits of automation.
James Sattler, Managing Director and Partner at the Boston Consulting Group sat down with Gayan Benedict, Salesforce Australia’s Chief Technology Officer to discuss their biggest learnings from The Reset and what’s next for the financial services industry. Here, James and Gayan discuss the headwinds financial services organisations are facing, how technology platforms can help organisations cut costs, boost efficiencies and drive productivity and how financial services can overcome roadblocks on the path to transformation.
Gayan Benedict: Why is this whitepaper necessary now?
James Sattler: It’s never been more important for financial service institutions (FSIs) to be forward-thinking. Like many other industries, FSIs are facing severe headwinds; some that pre-date the pandemic like digital disruptors, as well as new pressures brought on by the pandemic, like inflation and supply chain issues.
In particular, increases in inflation and interest rates have Australian households feeling the strain too. To best support customers, FSIs must understand how these macro challenges are impacting them.
Ultimately, I think FSIs have reached a fork in the road. How they respond to these challenges now will help them become more resilient in the future. This paper will guide FSIs on how to be more forward-thinking, strategic and resilient.
Gayan Benedict: You mention headwinds, what are some of the primary challenges facing FSIs right now?
James Sattler: The pandemic sped up some pressures that FSIs were already facing. For example, regulatory scrutiny and operational standards around risk and compliance have continued to tighten, and FSIs need to focus on building operational resilience into their organisations.
Looking to the future, there will be an ongoing imperative for FSIs to invest in technology, digitise and automate their businesses and build in control and compliance into their existing systems and processes.
Another headwind they’re facing is increased digital competition. Currently, some of the biggest FSIs in this space are digital banks that can provide superb digital-first experiences. Even before the pandemic, physical bank branches were closing. This was accelerated during the pandemic, as customers became accustomed to seeking support virtually.
Meanwhile, customer expectations have increased. Where it was once optional for FSIs to have advanced digital capabilities, today it is essential. That’s where having cost-effective compliance becomes important. We know of many FSIs that have digitised their customer-facing services but have not taken the same measures on the back end. It’s clear there’s still work to be done. As a result, the service staff using these systems are not experiencing those same seamless digital experiences as their customers.
All of these issues have compounded over the last few years. To weather this storm, FSIs need to cut costs, boost productivity and enhance internal efficiencies. This is where technology platforms and an associated digital transformation will come in.
Gayan Benedict: So how might a technology platform and transformation enable FSIs to cut costs, boost productivity and enhance internal efficiencies?
James Sattler: Well, let’s start with automation. We often see FSIs have lots of solutions in place, but no overarching platform to pull them together. The automation capabilities that come with technology platforms like Salesforce mean that FSIs can automate costly and error-prone manual processes that are usually in place to connect otherwise unconnected systems and processes.
And in a situation where FSIs are also struggling with skills shortages, they don’t want to waste employees’ precious time on lower-impact tasks. Technology platforms can step in, automate those manual efforts and free up an employee’s time so they can focus on the higher-impact tasks.
When we talk about cutting costs and boosting efficiencies, we also need to consider the democratisation of technology. Put simply, removing barriers to adoption. In The Reset, we see examples of organisations that build bespoke technology platforms, but the business units can’t make changes or update workflows because they don’t have the coding skills. This in turn increases reliance on IT teams, who may not always have the time to dedicate to these systems.
Modern technology platforms with low-code or no-code interfaces remove those barriers, empowering employees who are closer to the work to implement workflow process improvements and unlock benefits. That said, it’s not just the efficiency benefit. Modern technology platforms will improve the customer experience too. First, through personalisation, modern technology platforms stitch together different sources of customer data so it’s all in one place. Once an employee can access all the available information about a customer, they can use that data to give them the best possible customer experience.
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Gayan Benedict: Let’s talk more about the democratisation of technology platforms. Can lowering the barriers to entry create opportunities for experimentation and innovation?
James Sattler: Absolutely. Technology platforms and the associated digital transformation mean FSI employees have more space for experimentation. The ability to democratise the capability and lower the cost to do it is a significant game-changer. FSIs can scale up winning ideas using the same technology by embedding it and automating it into existing systems in the organisation.
By making it easier and faster to act on the insights from these platforms, it allows FSIs to execute and ramp up those capabilities into production a lot faster too.
Gayan Benedict: Many organisations come up against internal resistance or roadblocks when pursuing transformation. How can they overcome these obstacles?
James Sattler: It starts by having a clear north star. FSIs need to know where they’re going and chart goals at every stage of the journey, rather than having one big payoff at the end. Once you know where you’re going and how to get there, you also focus on having adequate funding at every stage.
I’ve found that many companies are great at running pilots, but these pilots aren’t always as productive as they could be. They might struggle to scale if they don’t take on feedback or don’t have a clear path to productionisation. From experience, any company looking to pilot a program should ensure they have a clear view of the scale-up plan and gather feedback from users along the way.
Quite often, we see FSIs get excited and invest heavily in the data and technology but miss the implementation side. Our report, The Reset, found that data and technology only account for 30% of what unlocks the value in a transformation process. The other 70% is around process change, change management and communication.
Gayan Benedict: Sounds like having a strong strategy behind change management and driving adoption will be key to a transformation’s success. What are some ways FSIs can ensure this?
James Sattler: Exactly. I can’t understate the importance of getting that 70% right — the non-technical side of transformation. In The Reset, we outline three accelerants that will help FSIs realise value from technology. One of these accelerants is around liberating technology and data. So as I mentioned before, driving adoption will be predicated on making the platform accessible to all business units, not just IT teams. But it’s also about fostering a culture of learning and upskilling.
After all, we know employees value investment in their skills, particularly as they relate to digital competencies. Organisations need to adopt a continuous learning capability so staff can take advantage of those skills and put them to good effect to help with the broader digital transformation.
Another accelerant we cover is around change management. Businesses must take a truly end-to-end approach to building the solution so that business owners, end-users and technology teams need to work together to roll out technology changes.
Gayan Benedict: Finally, what surprised you the most about the report?
James Sattler: For me, the biggest surprise is that the pathway forward for FSIs is actually quite straightforward. To stay competitive, cut costs and boost efficiencies, FSIs need to invest in modern technology platforms and accelerate digital transformation now.
The surprising challenge is the journey to get there — we know many transformations aren’t successful. FSIs must be deliberate and strategic in rolling out transformation projects, and account for the non-technical necessities, like change management, removing barriers to entry and redesigning processes and policies.
Another surprise I came across in the report was around the rate of acceptance, as opposed to the rate of change. In the past, it would take a long time to embed change but the events of the last few years have seen risks and shocks catalysed. We’ve seen FSIs across the board levelling up faster than anyone would have predicted even five years ago.
That’s not to say that the challenges of layering on these further capabilities have gone away. FSIs need to understand that a successful transformation will be predicated on establishing solid systems that enable table-stake requirements, like enabling compliance at scale and gathering a comprehensive view of the customer.
Download The Reset to learn how your FSI can cut costs and boost efficiencies. The paper draws on qualitative and quantitative research from 15 financial services leaders and draws on successful endeavours at NAB and AMP to chart how FSIs can realise the true value of a digital transformation.