Driving economy through digital transformation

Digital transformation is the process of embedding technologies across businesses to drive fundamental change. Starting a digital transformation journey also requires a new mindset. It is a chance to reimagine how companies do things, often from the ground up. 

Two concepts related to digital transformation are digitisation and digitalisation.

Digitisation is the process of translating analog information and data into digital form e.g., scanning a photo or document and storing it on a computer.

Digitalisation is the use of digital technologies to change business processes and projects—e.g., skilling employees to use new software platforms designed to help launch products faster in an institution.

Prior to the Covid-19 pandemic, digital transformation largely focused on customer experience. Then, everything changed and accelerated. Now, digital transformation is the centrepiece of operational efficiency and innovation across the organisation.

Research shows that leading companies in enterprise technology were growing two times faster than most companies, and by doubling down on their tech investments recently, they are now growing five times faster.

Leaders tend to adopt innovative technology sooner and reinvest more frequently. Emerging tech includes blockchain, extended reality, open source, 3D printing, and robotics.

Data analytics saw the greatest adoption pre-pandemic while Internet of Things and cloud have seen the biggest adoption after the pandemic.

The five major areas companies must address for digital transformation are: strategy transformation; operations realignment; adoption of new agile practices; flexible technology; and people management.

The pace of digital transformation in banks has been increasing annually. Twenty-eight per cent of banks that began their journey in 2021 are already more than 50 per cent done. Comparatively, 43 per cent of those who began the journey in 2018 are more than 50 per cent complete.

Digital transformation in the finance sector is no longer a technology upgrade, but a core business strategy. Banking and finance have progressed from paperwork-laden processes to tip-of-your-finger mobile apps, delivering a positive impact on both revenue and customer experience.

Some of the benefits of adopting digital ways of working include better customer experience, enhanced brand reputation, streamlined operations, increased sales and customer retention, extended organisational reach, improved decision-making, and faster product development.

The biggest challenges in the financial sector are moving from legacy systems and upskilling workers. Huge investments are required to shift from legacy to new technology infrastructure and develop digital expertise.

Banks and traditional financial institutions are subject to high-security risks due to personal data and transaction records, which make it harder to execute changes while meeting compliance requirements.

Changes in workforce and workplace culture are significant as the talent model mandates upskilling employees which is expensive and requires time. Competition with fintech and new online finance players like Amazon, Google and Facebook leaves banks out of the process as customers transact directly.

To stay viable and thrive in this rapidly changing environment, banks need to be good at anticipating what's next and reacting in real-time. Data-driven decisions made today will impact market resilience in the future.

The author is an economic analyst and works for PwC Bangladesh. The opinion is his own.