Back in March last year, National Australia Bank CEO Cameron Clyne made the comment that should banks fail to significantly invest in technology they would struggle to compete over the next decade. The same applies for all organisations and their CEOs.
The National Australia Bank five-year blueprint heralded in technology growth as a major strategy in creating a better business model and $800 million in targeted savings.
Mr. Clyne views technology is a integral in his approach to fix problems created by difficult legacy assets within the bank’s British division.
“We would go so far as to say a bank that is not dealing to its technology from top to bottom will struggle to be a competitive force in the next decade, so it’s appropriate given the progress we’ve made since 2009 and where we’re at that we do refresh our strategic agenda,” he told analysts in a 2013 conference.
Mr. Clyne’s strategy was to simplify and digitise the business and customer management.
“We feel the investment we’re making in technology is essential to banks’ competitiveness over the next decade and failure to do it will not make us competitive,” Mr. Clyne said.
“Therefore we think from a strategic perspective the best thing we can do to add value to our shareholders is to continue to pragmatically work out our legacy positions and continue to ensure the Australian and NZ franchise is invested in to get them back to being number one in the market.”
A Roy Morgan poll conducted in December last year found different banks appeal to different Technology Segments. The report suggested that HSBC has the highest proportion of its customers falling into the “Technology Early Adopters” Segment (27.9% of its customers) followed by Citigroup (20.3%), ANZ (19.3%, highest of the majors), Westpac (18.4%), NAB (18.2%), CBA (17.2%) and Building Societies & Credit Unions as a whole (13.7%).
At the other end of the spectrum, “Technophobes” and “Technology Traditionalists” who are the laggards of technology adoption should not be ignored entirely as they make up a large proportion of an institution’s banking customers. Building Societies & Credit Unions as a whole have the highest proportion of “Technophobes” and “Technology Traditionalists” at 50.6% followed by NAB & Westpac (both with 42.4%), CBA (41.7%), ANZ (39.9%), Citigroup (35.3%), and HSBC (27.6%).
It has become increasingly evident that institutions must not only design innovative new banking technologies for the tech savvy customer but also cater to the needs of the late majority and laggards who are not so inclined or interested to use new technology.
Norman Morris, Industry Communications Director Roy Morgan Research says:
“With the rapid increase in mobile technology, financial institutions have long been focusing on introducing mobile banking applications, thus making it easier for customers to do their banking on the go but this raises all sorts of questions such as, ‘is it safe and secure’? What needs to be done to make sure customers in the later technology adoption segment are ready and willing to take up these technologies? Are there educational and training programs in place for those that are intimidated by and don’t know how to use such technologies?
“‘Technology Early Adopters’ are an important segment because they are the first individuals to purchase and use a new technology. They present an opportunity for institutions to tailor their online or mobile offerings to this segment. They are more likely to be young people and mature adults aged between 18 and 40 who are well educated, employed full-time, and earning an above average income. As such, their combination of higher income and risk taking behaviour enables them to readily take up new online banking technologies and mobile apps. It is interesting to note that Early Adopters and Professional Mainstream make up more than 50% of HSBC banking customers.
“On the other hand, ‘Technology Traditionalists’ and ‘Technophobes’ hold conservative values, are wary of change and are usually the last to take up new technologies. Technology Traditionalists are not great lovers of technology and really only take it up once it becomes mainstream. Technophobes will only adopt technology when they are forced to; due to disinterest and lack of needing technology in order to fulfil their lives. Technophobes are likely to be aged between 60 and 80, with low education, low income and lower socio-economic status. As such, institutions need to find effective ways to engage with this group so as to demonstrate the value and use technology can bring to their lives. Financial institutions such as Building Societies and Credit Unions need to pay particular attention to engage the late majority as they constitute more than 50% of their customer base.”
The banking sector provides an important case study in what CEOs face in terms of customer engagement as well as the imperative of their technology adoption schemes.
The world has changed: mobile devices, social media, data mining, videoconferencing, virtual reality, blogs, tweets…
The list of technologies that could offer companies big-time benefits, or lead to big-time disasters, is daunting. Information technology is the foundation for doing business in the digital economy; savvy tech skills are crucial to competitiveness, customer relations, client services and even staff retention. But companies must be brave in its adoption and not jump in too lightly. Where it does become daunting is knowing what technologies best suit your business. In other words, how will you do business in this brave new digital world?
An exceptional article in the Wall St Journal written by JEANNE W. ROSS And PETER WEILL listed four key questions that CEOs should ask themselves. Those questions were:
1. Are we using technology to transform our business, or are we just adding bells and whistles to existing processes?
2. Are you ignoring important business differences as you standardise processes across the company?
One tenet of the digital economy is that standardising business processes is a no-brainer: It allows a company to operate the same way, everywhere, and creates a reliable, consistent experience for the customer.
3. Who is making sure the company’s digital strategy is being implemented?
Somebody needs to own this responsibility. Thus, top executives must name an executive who will be accountable for every enterprise process, and who has the political clout to overcome resistance. A committee is not capable of such oversight.
4. Is electronic data empowering your people or controlling them?
For most companies, the great advantage of the digital revolution is the data they can now collect. They know the minute-by-minute electricity usage and the names and buying patterns of shoppers who buy diapers; they know how much more soup gets sold if theY drop the price by 10 cents, or what arguments work best when a life insurance agent cold-calls a prospective customer.
All that data can lead companies down two very different paths. First, it can help push decision-making down to front-line employees. Alternatively, it can be used to centralise decision
making and monitor employee
Evidence indicates that the former approach offers benefits for both companies and employees. (NB: You can read the full article at http://online.wsj.com/news/articles)
An in-depth report from ACCA’s Accountancy Futures Academy (the Association of Chartered Certified Accountant) and IMA (Institute of Management Accountants) called “Digital Darwinism: thriving in the face of technology change” listed 10 top technologies with the potential to reshape the business landscape: mobile; big data; artificial intelligence and robotics; cyber security; educational; cloud; payment systems; virtual and augmented reality; digital service delivery and social.
Informed by interviews with global academics and experts in accountancy and technology, alongside a survey of over 2,100 ACCA and IMA members around the world, the report asked respondents to what extent they expect developments in technology to transform the way the finance function do business over the next 10 years.
The findings for Australia reveal respondents to be tech savvy and seemingly prepared for the future when compared with other countries and regions around the world.
Australian respondents see the future benefits of mobile technology, with 95 percent saying this will be impactful. This was the highest score in the world.
When asked about the impact of big data on business, 91 percent of Australians confirm this will be influential.
Australia also scores the highest in the world when it comes to recognising the need to develop new skills to deal with the demands of big data and technology changes; 90 percent of respondents say data modelling and analysis skills will be important, with 90 per cent also saying knowledge of data extraction tools to mine business knowledge will be important.
Chris Gentle, Partner and head of research at Deloitte, and member of ACCA’s Accountancy Futures Academy says: “Professionals must be open to the changes created by big data, cloud, mobile and social platforms, and face up to the demands of cybercrime, digital service delivery and artificial intelligence. The future will not be like the past and we will all need to adapt.”
John Winter, head of ACCA Australia says: “What’s clear from this research is that professionals in Australia are tech aware, with an eye on future tech trends.
“They are prepared to be influential agents of change – they’re adept at using technology to advance their careers, their client’s prospects and those of their own organisation’s too. This influence works best within the work place with 79 per cent percent saying they could influence the use of technology in their business; persuading their clients is a challenge however, as only 56 percent said they were able to influence decision making about technology.”
Looking to the future, the report says there are challenges ahead for the profession. Speaking about finance and accountancy Winter comments: “The profession needs to shape their technological future rather than be shaped by it. The profession needs to be proactive; the changes ahead are an opportunity to redefine roles and the extent to which the profession is involved in short and long-term turn technology related decisions. They need to adapt to survive.”
Concluding, Winter says: “Our report offers many actions the profession needs to take to deal with the challenges of the top 10 technological developments. They need to develop and change management styles, to assess risks and address security issues; they will need to explore further the impact of automation and prepare for changing working patterns. But ultimately, they need to use technology to add value. There lies the real opportunity of technology.”
The bottom line is we all must embrace technological change and we are all willing to so. Why then, are companies slow to move.
The MYOB Business Monitor Report found that at least one third of small to medium businesses are reducing their performance potential by overlooking significant opportunities offered by the digital economy.
A survey of 1,022 Australian SME owners and managers by research firm Colmar Brunton, found less than four in 10 (38%) have a business website – unchanged on six months prior.
12% of these operators also have a business social media site, and a further 8% have a social media site only – a new question for this survey wave. The proportion using social media in some way for business rose to 33% – up on 21%.
Only 16% said they use cloud computing in business – also unchanged on six months prior. Accounting software usage was relatively stable at 64% from 67%.
Tellingly, business operators who utilise online technologies were more likely to see a revenue rise in the 12 months to August this year. Those with both a business website and a social media site (12%) were at least 63% more likely to see revenue rise than those who didn’t have one of these sites. This leading edge was followed by SMEs using cloud computing, who were 59% more likely to see an annual revenue rise than non-cloud users.[table “1” not found /]
Business Division General Manager James Scollay says there is tremendous scope for Australian business operators to boost their financial performance, strengthen customer acquisition and retention, enjoy work environment flexibility and improve business productivity by using online technologies.
“Businesses that use online technologies are increasingly outperforming their less tech savvy competitors. That’s why it’s vital for government and business leaders to work together with our business community, sharing knowledge about the benefits of embracing the online world and supporting them on their journey. Even the simplest insights can make the world of difference to a business.
“Half our respondents don’t have an online presence. Our research found those using a website and social media in business say these efforts produce more customer enquiries or leads and greater sales conversions. Those using cloud technology say it reduces IT costs, allows access to more technology and enhances their ability to work remotely. That’s why we encourage businesses of all shapes and sizes to make their business life easier by reading up about the benefits of implementing technologies such as a website and social media presence, online accounting software and so on. The Internet has a range of forums, blogs and video tutorials on these topics.
“One third of SMEs are missing out on many benefits – a proportion that is way too high in this digital age. They are in danger of being left behind other businesses that have taken the online leap.”
Should you take the leap? Yes. Failure to do so, will see your competitors rise above. However, be careful in the way that you adopt, it’s a fine line between success and failure. Perhaps take a leaf out Cameron Clyne’s book: adopt over a five-year plan, monitor what is necessary, make sure your implementation is good for customer as well as company and shareholders, then profit from your forward thinking.