Digital Transformation and Effective Board Oversights
Like most of the world, the financial services industry is experiencing a paradigm shift and this has been accelerated by the pandemic. Technology is now a competitive need, emerging Financial Technology industry integrate new technologies to not only deliver their services and products but also increase their margins, stay lean and relevant, provide a better customer experience.
Technology is moving beyond the front and back-office process management to edge closer to consumers as it has now become the imminent funnel for every organization’s bottom line. Technology leaders are now more prevalently expected to be revenue contributors than process/back office enablers and any business that do not embrace digital transformation is at the risk of being left behind.
Boards play a major role in the strategic directions of a business, hence every board must adapt itself to the new trend, embrace new, digital-first tools and mindset to steer any organization towards lasting success.
Board oversight functions in achieving technological growth
Boards need to understand and be willing to discuss the organizations’ technological capabilities, expansion plans and value, impact on accelerating almost every short and long term strategy and operational process pursued by businesses. Boards should be actively involved in learning how the company is upgrading its technology to stay current with new advances, be competitive and relevant, and seize chances to increase operations and market share.
To do this, boards need to evaluate the following impact;
- Impact on business models: For most traditional industries like ours, technology has disrupted the expectations of their customers, employees, and suppliers. The upward mobile market consisting of Millennials and Gen Z are no longer reliant on the help of a financial advisor in an office or meeting face to face with a portfolio manager to manage their finances. Hence, boards need to have a critical understanding of the changes in how the products are distributed and how this impacts the back-office operations & processes.
- Impact on customer experience and engagement: Technology has impacted how businesses serve and engage their customers. The availability of digital touchpoints enriched with data has changed expectations of customers and other agents especially as they can now compare experiences with Financial Technology companies. To lead, it is important for boards to continuously evaluate channels and strategies used in capturing customers’ loyalties, ensure drastic reduction in time-to-service and the business incorporates ways those capabilities can continue to improve and deliver on customer experiences.
- Impact on back-office operations and processes: Automating and integrating processes, increasing speed, enhancing employee and business partner experiences, and lowering restrictions, hurdles, and manual work are all priorities for tech-first firms. This shifts the focus away from low-value administration and toward high-value labour.
- Impact on business goals: It is critical to understand how the introduction of technology contributes to the business goals are and how they link to the company’s strategy. By understanding this impact, it helps the board to guide on the right speed and scale, create and monitor timelines and incremental milestones, evaluate leadership capabilities and the resources required to achieve each milestone.
- Impact on risk: It is important to always expand the technological impact beyond immediate gains and create involve flexibilities for management to explore new opportunities it may present. However, the board is expected to measure the risk and ensure there are enough mitigants. Technology presents its risks such as cybersecurity, boards must continue to ask questions to guarantee the safety of data, compliance with data protection regulations and increased tech infrastructure safety.
Metrics to monitor to ensure oversight
Boards must become have gatekeepers to ensure that every investment made in technology generate considerable returns and achieve their goals. Hence, boards are advised to add the following metrics to their management performance review;
- Financial impact/ROI
- Margins and productivity
- Actual vs. budget spend
- Customer net promoter score
- Revenue from new products and services
- Expansion of intellectual property
- New opportunities explored
- Number of technology failures
- Product quality enhancements and exceptions
- The retention rate of new digital talent
- Employee training
- Employee engagement surveys (including discomfort with or resistance to)
- External insights regarding culture, upskilling efforts and transformation strategy
Adopting Agile Board
To create effective oversights, boards need to be more agile and adopt technologies that streamline many of the cumbersome board duties of the past. In selecting this process, it is important to ensure that it incorporates;
Strong Security: The process must give board directors and senior executives the confidence and assurance that their corporation’s data is secure from hackers. Rigorous security measures protect communications between board members and managers, protect stored documents and other data, and ultimately limit the probability of a data breach.
Efficiency & Flexibility: Board directors should be able to conduct board business securely from their devices anywhere in the world and at any time of day or night. Board directors should be able to get their board packets in seconds rather than waiting for them to arrive in the mail. Faster delivery means that board directors will have more time to review the agenda, financial reports and committee reports. Having more time to prepare for meetings means they’ll consider the decisions they need to make before the meeting date, alleviating last-minute changes to the agenda.
Since the pandemic widespread shift to remote work, the subsequent quick adoption of new technologies has hastened the need for boards to think about digitalization differently.
For a board to be successful in its objective of having a positive, long-term influence on the consumers, organization and other stakeholders they serve, board members must maintain unheard-of levels of awareness, accountability, and involvement in the adoption of technology. This entails investing in digital technologies, adhering to cybersecurity best practices, and learning the skills needed to sustain a business in today’s digital-first environment.