Ex­ec­u­tive Anal­y­sis

Na­tional Aus­tralia Bank CEO Cameron Clyne once 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.

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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 So­ciet-

‘ 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.’

ies & 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

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