Digital All The

February 2016

ACT THINK THINK Plan D – DigitalPlan all the way BEYOND MAINSTREAM BEYOND How financial Howservice financial providers livelihood can protect their with end-to-end digitization 2 THINK ACT End-to-end digitization PLUS EXAMPLE FROM THE BIG THE SAVINGS AND LOAN (S&L) BUSINESS 3 P. 17

FINANCIAL SERVICE PROVIDERS must make a concerted effort to launch the digital transformation of their business model. Shifts in clients' behavior, new competitors and regulatory changes are breaking up and redefining existing value chains. Page 3

END-TO-END DIGITIZATION of the business model lays the foundation for durable reorientation. Insular solutions are unsustainable and cannot meet the need for customer focus and efficient processes. Page 9

IMPLEMENTATION must be driven by collaboration between many corporate units, with IT playing a key role as business enabler. Page 13 THINK ACT 3 End-to-end digitization System transition: Digitization is revolu- tionizing the finance industry. To master the challenge of change, companies need a new strategy.

The recipe for success is digitization from start to fin- of these processes could today be handled digitally. ish. And finance is one of the industries with the great- Ongoing development of financial service providers' est potential for all things digital. Why? Because data mission and the transformation of their business mod- – client and transaction data, to be precise – is the raw el is affecting banks and insurers in the retail business material that every bank and insurer gathers, sorts, as well as – later in time – in the front-end business. processes and links together. In principle, almost every Until as late as the 1980s, financial service providers aspect of their business could be digitized in its entire- stood in the vanguard of business innovation, driving ty. Which makes one wonder why many incumbent fi- new technological development and forging networks nancial service providers are still essentially analog earlier than many other industries did. Ever since the operations. Business models, products and processes dawn of the internet age, however, they have been fall- all reflect the tried and trusted conventions that have ing behind. At the present time, established financial underpinned successful performance for decades: service providers are setting critical trends neither for branch offices for one-on-one consulting, a ready-made the economy as a whole, nor even for their own indus- product range, and manual, paper-based application try. They are often not keeping up with the pace of dig- processes and decision paths rooted in personnel-in- ital innovation. Today, new, technology-driven provid- tensive front, middle and back-office structures. Most ers are setting the standards in the finance sector. A 4 THINK ACT End-to-end digitization

CHANGE AT THE TOP Innovation timeline: Comparison of new and incumbent financial service providers

Online Banking Citibank ATM Global Payments City Bank of New SWIFT Network York (Citibank)

1939 1973 1981 1998 2003 2008

Online Payment Blockchain Financial service providers invent new technologies PayPal Bitcoin Technology companies invent new financial services Network Crowdfunding Source: Roland Berger ArtistShare

DRIVING FORCES The digitization of client relationships

ROUTINE DIGITAL CLIENT CHORES EXPERIENCE EXAMPLES

amazon Shopping 24/7 24 availability H&M

NIKEiD Product Individualization selection IKEA

Consumer Information, com- Check24 information parison, advice Pricegrabber

Source: Roland Berger THINK ACT 5 End-to-end digitization

There are certainly valid reasons for the defensive dig- Time is of the essence, and three developments in ital stance adopted by many incumbents. The fallout particular are causing grief for incumbents in the fi- from the 2008 financial and economic crisis is still nance industry. We call these developments "digital much in evidence: Balance sheet reviews and stress wringers", because they are putting the squeeze on tests tie up capacity, stricter regulatory demands and financial service providers, creating huge pressure for stipulations must be met, and central banks' low-inter- change. Those that hesitate or procrastinate will fall est-rate policy puts pressure on earnings and entire behind in the digital race. And ground that has been business areas. At the same time, yesterday's techno- lost is hard to regain. Indeed, the gap may become so logical edge can actually place a burden on the indus- wide that stragglers ultimately have only two options try today. To take just two examples: IT architectures left to them: settle for a role as product suppliers to expanded in gradual stages since the 1980s but never digital providers – or get out altogether. fully renewed now constitute so much legacy ballast that is difficult to reform. This limits and obstructs DIGITAL WRINGER I: progress in the digital realm. Second, clients' online Clients' demand for digital services habits and the emergence of new digital rivals gives Every aspect of our daily routine is growing increasing- bank consultants ever less direct exposure to clients. ly digital. People appreciate the information and trans- Branch office structures that welcome clients with action possibilities afforded by the internet. They make self-service terminals only serve to reinforce this trend. liberal use of the always-on availability of product and Given the scale of these challenges, the pivotal de- pricing information. They configure products online cision-makers at financial service companies often just the way they want them. B have more than enough to occupy their attention. Clients today expect digital services that are easy Moreover, these decision-makers' understanding of to use, genuinely add value, are transparent and are the business is in many cases shaped by the models secure. In return, they are willing to disclose informa- and structures of decades past. As a result, it is hard for tion about themselves that digital providers can use them to develop concrete and sufficiently ambitious and process. Clients are also excellently informed strategies that adequately reflect the current pace of about what constitutes the digital standard in other change. industries. And this aspiration level naturally spills These issues are all perfectly understandable. But over into what services they can expect of the finance understanding them will not make the problem go industry. away. The fact is, financial service providers that un- Longstanding financial service providers are only derestimate the sheer force of digital change in their beginning to exploit the potential of digital business. own industry and that fail to respond on a fundamen- Yet the digital transformation of their organizations tal level will miss the boat – and may even be left high and business models will be anything but a leisurely and dry as the market moves on. As things stand, it is stroll. Companies that change too slowly run the risk still impossible to fully gage the dynamics of digital de- of forfeiting their access to an increasingly inter- velopment and the impact it will have. What has long net-savvy client base that already takes the conve- since been clear, however, is that the digital upheavals nience of digital platforms as a given. That will signifi- ahead will proceed faster and be more far-reaching cantly weaken their position. than anything we have seen in recent decades. A system transition is already underway that will bring pro- DIGITAL WRINGER II: found change to existing structures and ways of doing Aggressive, digital-savvy rivals cornering things in the finance industry. market shares This study charts a path by which financial service New competitors are penetrating the markets and re- providers can give themselves a consistent new (digi- defining inherited value chains. Replacing product fo- tal) orientation – a new focus that can safeguard their cus with a strong customer orientation, they are posi- future livelihood. The issue at stake is a concept for the tioning themselves – very effectively – as intermediaries new day that is dawning in the finance industry. We call between product providers and clients. They are also it Plan D. open to cooperation with other market players. These 6 THINK ACT End-to-end digitization

newcomers have understood that, for many clients, fi- Even before a product has been selected, these plat- nance and insurance are parts of customer journeys forms are increasingly succeeding in tying clients to a that began further upstream: They are a means to an given digital ecosystem. Clients receive in-depth infor- end, a way to achieve a primary goal (such as buying a mation, a transparent overview of prices and products, car). Armed with this awareness, these players adopt and a wealth of financial offerings. Increasingly, these context-sensitive positions within the customer jour- platforms are also handling tasks that used to be the ney, bringing decision processes forward to an earlier preserve of established financial service providers – stage than the traditional incumbents. In the UK, for from consulting to the signing of contracts to aftercare. example, car insurance is now sold exclusively via com- For the remaining links in the process chain, they use parison and brokering platforms. At the same time, digital interfaces to seamlessly integrate other part- captive banks and captive insurers are also using their ners, resulting in a single, digital, efficient and custom- business model to increasingly tie customers in. Logi- er-oriented overall process that adds substantial value cally, therefore, financial service providers that sit for the client. around waiting for clients to visit their websites and The triumph of the digital financial economy is re- branch offices go away empty-handed – or at least no flected in strong gains in market share, market capital- longer have any direct influence on relevant client de- ization and investment volumes. By contrast, the offer- cisions. ings of traditional providers in the analog world appear The new players' digital and mostly platform-based ever less able to compete. D business models try to create a transparent overview of market offerings, give their clients comparative views DIGITAL WRINGER III: and opportunities for interaction, and facilitate digital Regulation that further intensifies digital integration. These companies have thoroughly grasped competition and puts pressure on incumbents the rules of the digital game, the possibilities opened The new financial intermediaries are currently operat- up by the internet and the value of client data. They ing in a digital ecosystem with comparatively little reg- have also aligned themselves with open, intercompany ulation. This is partly because most of them are not business processes. fully-fledged banks or insurance companies, a circum- Having brought financial services and technology stance which allows them to escape the many legal re- together, many of these new enterprises nowadays po- quirements and obligations in this industry. Another sition themselves as "FinTechs", or financial technolo- reason is that regulatory adjustments themselves are gy companies. Unlike many of the start-ups in the new still lagging behind the rapid pace of digital develop- economy at the start of the millennium, a whole series ment. The playing field is therefore not level – and new of FinTechs now operate a robust, well-funded busi- players are in the ascendancy. The latter are indeed en- ness model. And if it turns out to be a commercial suc- joying ever greater freedom and opportunities to woo cess, they find big technology firms and financial back- clients, as barriers to market entry are systematically ers standing by to take on the role of partners or lowered at the European level. investors with particularly deep pockets. Several inno- The EU passporting initiative, for example, gives vative online platforms have already cornered a signif- foreign competitors easier access to the European icant share of their market. market for financial services. At the same time, the For incumbent financial service providers, the resul- Payment Services Directive 2 (PSD2) and the EU's tant upheavals are immense. In the past, it was they who Mortgage Credit Directive are strengthening the mar- were accustomed to shaping and guiding much of the ket position of brokering platforms for financial ser- customer journey. Thanks to digitization, however, cli- vices. For the first time, providers are thus being al- ents can now choose from any number of services. This lowed to handle direct money transfers and make gives them greater decision-making autonomy and al- third-party use of PIN and TAN codes for information lows them to control their own customer journey. C and transaction purposes. Additionally, governments The new strategic concepts adopted by digital chal- and national supervisory bodies are continuing to pro- lengers are vividly apparent in the field of online plat- mote online business initiation. Germany's Federal forms that compare and broker financing services. Financial Supervisory Authority, BaFin, for instance, THINK ACT 7 End-to-end digitization

C TURNING POINT Financial service value chains are being redefined – Example: Credit process

BANK controls application process

CONTRACT INFORMATION CONSULTING SIGNING AFTERCARE

CLIENT

CLIENT is supported by various partners during the individual process steps

CONTRACT INFORMATION CONSULTING BROKERING SIGNING AFTERCARE

Online Inter- Inter- Inter- Inter- comparison mediaries, mediaries, mediaries, mediaries, platforms banks, other banks, other banks, other banks, other lenders lenders lenders lenders

Large number of FINANCIAL INTERMEDIARIES

Source: Roland Berger 8 THINK ACT End-to-end digitization

D has given the green light to the use of online-based video technology to identify and authenticate clients. HOW SERIOUS IS THE THREAT? Even the requirement for analog signatures will soon The new world of digital financial service providers be a thing of the past: From mid-2016, the EU's eIDAS Regulation will give equal standing to suitably authen- ticated electronic signatures and physical signatures. Financial intermediaries' share of the sales channel This legislation clears the way for a fully digitized pro- mix for savings&loans in Germany (2010–2016) cess chain. At the same time, stricter conditions in areas such as documentation and reporting are forcing incumbent financial service providers to invest heavily and launch new projects – at a time when they should ide- 35% ally be pumping money into digitization and strategic 17% development. Perhaps not surprisingly, one international survey of leading retail banks conducted by Ro- land Berger recently found that more than half of these Annual global investments in FinTech companies banks do not invest more than 10% of their IT budget (2008–2014) in new digital "offerings". The bottom line is that traditional providers are be- coming less and less attractive to clients. That is true of retail clients and straightforward bulk business, but it will also increasingly affect corporate clients and more complex financial services. 0.5 12 EUR bn EUR bn DIGITAL BREAKOUT As things stand, incumbent banks and insurers still have sufficient competitive clout to initialize the digi- Market capitalization of the crowdlending platform tal transformation under their own steam. Part of the Lending Club (2007–2015) solution must be to replace safe-bet insular solutions and quick-and-dirty symbolic measures with comprehensive digital restructuring. What do we mean by that? Nothing less than the rigorous, end-to-end digitization of everything from a flexible client interface 0.01 4.9 to the back end, combined with steps to open busi- EUR bn EUR bn ness processes up to online interaction with clients and relevant partners. Only those service providers that reach substantial digital maturity in a very short Time it takes for credit decisions today vs. in a time will survive on the market. digitized and automated procedure

5-7 35 days seconds

Source: Roland Berger THINK ACT 9 End-to-end digitization A quantum leap in quality. Clients have long been internet-savvy and accustomed to platforms, so small, slow steps will not get the job done for financial service providers.

Products and processes must be seamlessly digitized dant clarity. Straightforward services in particular from start to finish, from front end to back end. should be permanently available online, which pre- It is already clear who the winners are in the digi- supposes seamless digital processes and readily com- tization race: the clients! The mobile internet and the prehensible products. new information and interactivity possibilities it In the financial service sector, a wide gulf often sep- opens up are allowing them to control how the game arates (clients') demands from (corporate) reality, es- is played. What used to be clients' wishes have now pecially regarding the signing of online contracts for become demands. They have already forced indus- financial products. However clearly clients express tries such as retail and tourism to design a simple their wishes, satisfying these demands is a complex and transparent digital purchase experience – and to challenge for the incumbents, who continue to strug- genuinely add value online. What is expected of mod- gle with legacy IT landscapes, complex products and ern products and services has been stated with abun- heterogeneous processes. E 10 THINK ACT End-to-end digitization

E SOME CATCHING UP TO DO Incumbent financial service providers fight for their own future

CLIENTS' NEEDS

Alternatives for Company's own comparison offerings

Transparency Complex solutions and simplicity and processes

Flexible solutions Rigid product for client projects structures

24/7 online and Obsolete IT and res- mobile availability tricted service hours

Online contract Process interruptions signing and manual work

CHALLENGES

Source: Roland Berger THINK ACT 11 End-to-end digitization

INFERIOR INSULAR SOLUTIONS vices that relate to the client's specific need and inte- Many financial service providers have responded to grate relevant market players. the discrepancy between digital client requirements The latter point necessitates cooperation with and their own existing offerings by launching digital third parties. Yet many established financial service modernization programs. Driven by pressure from providers are overly reluctant to create new digital ser- the market and the desire for rapid improvements on vices and cooperate with suitable external aggregators, the one hand and held back by the complexity and brokers and online platforms. Many such models run inertia of obsolete structures and systems on the oth- counter to their traditional business philosophy and a er, many of them are nevertheless acting without any time-honored focus on their own products and inter- clear strategic focus. They devote their attention to nal processes. Worse still, many financial service pro- optimizing the front end, but neglect the vast poten- viders would in any case be unable to realize satisfacto- tial that lies dormant in consistently digitizing every ry cooperative offerings, simply because they them- process right through to the back end. We are con- selves are still too digitally immature. Online compari- vinced that this kind of approach is not enough to son portals, for example, insist that partner companies usher in a sustainable reorientation. Instead, compre- must respond to client inquiries within a matter of sec- hensive digital offerings are needed to provide genu- onds. That can only be done if a financial service pro- ine answers to the client demands outlined above. vider has reached an advanced level of digitization – Organizations that fail to respond will squander vast not only at the front end. swathes of potential efficiency gains. Two examples of limited front-end initiatives are: SUPERIOR ALTERNATIVES Website optimization: Some companies revamp We believe that consistent end-to-end digitization is their internet presence, introducing modern layouts the most important strategic direction for financial and user guidance concepts while adding in tools and service providers to take. It lays the basis on which they online services. However, any client who wants to actu- can further develop their business models. It sharpens ally sign on the dotted line often still has to jump customer focus and raises internal efficiency, creating through all the traditional hoops of paper-based appli- opportunities to build new, enterprise-wide networks. cations and wait some considerable time before final Financial service providers that embrace this rigorous confirmation is forthcoming. focus avoid both insular solutions and short-lived ex- Smartphone apps: Mobile applications initially ap- periments, as well as improving their competitive posi- peal to users with their attractive design, modern log- tion in respect of innovative challengers. The specific in and identification procedures, information ser- benefits they reap are these: vices and easy-to-use online banking functions such Customer focus: End-to-end digital processes and as transfers. Yet even here, companies frequently fall offerings meet clients' heightened demands for sim- short of the seamless, straight-through transaction plicity, speed and the ability to sign contracts for prod- facilities that are expected. One main reason is that ucts. Financial service providers can deliver the same more extensive functionality requires direct access to standard of service as digital providers in other indus- back-end systems. However, these interfaces exist ei- tries. Rigorous digitization gives companies credibility ther not at all or with a substantial time lag at best. in the eyes of their clients and prevents the latter from German consumer advice organization Stiftung War- being disappointed, as the modern front end leads to entest recently confirmed this finding after examin- an equally powerful back end. ing 38 banking apps: Many providers fall short of Efficiency: Financial service providers today devote their clients' demands for ease of use, convenience a large proportion of their process time and cost to and data protection. manual or only semi-automated middle and back-of- Financial service providers' front ends often fail to fice procedures. Simple products and processes can be rigorously align information and transaction services automated almost in their entirety, and that could save with the primary needs of the client. Consumers are financial service providers as much as 40-50% (some attracted by offerings that complement the actual fi- even more) of the capacities they currently expend in nancial services with additional information and ser- this area; capacities they urgently need. However, re- 12 THINK ACT End-to-end digitization

COMPARISON OF STRATEGIES The benefits of seamless process design

INCOMPLETE SEAMLESS digitization process strategy – + design

Insular Exhaustive IT solutions modernization Website optimization Harmonized IT Smartphone apps systems Social media Automated processing Open interfaces Digital partnerships

FRONT-END END-TO-END DIGITIZATION DIGITIZATION

Source: Roland Berger

stricting optimization measures solely to organization- New beginnings from within: End-to-end digitization al and process issues means that only a fraction of the is accompanied by major changes within the company. potential savings are actually realized. It impacts on organizational structures, the way people Strategic potential: Digital business processes enable think and work, qualification profiles and, by no companies to open up to the outside world, creating new means least, the kind and quantity of personnel a com- possibilities for interaction. Clients and third parties pany needs. All of which fosters a new vision of the fu- can engage in simple data entry and transactions of ture within the organization; and that can engender their own that reach right into the provider's back office. the excitement of a new beginning – for example by Successful market players positioned at adjacent links replacing menial administrative tasks with new, more in the value chain – such as comparison and brokering client-centric assignments. Moreover, the transition is platforms – can thus become integrated, or even incor- comparatively easy to communicate, given that em- porate financial service providers' digital offerings in ployees are already experiencing it in their everyday their own business models. In a nutshell: A whole world lives outside of work. of new strategic possibilities opens up, with an extensive Consistently digital companies win new market reach (thanks to the internet) and greater flexibility to shares and exploit the full benefit of these advances. respond to changes in the marketplace. F THINK ACT 13 End-to-end digitization A fresh start. The digital transformation goes far beyond piecemeal optimization. It tears down barriers inside and outside the company.

Incumbent financial service providers are right now This strategy is a blueprint for the process of reinvent- in a critical transition phase. They are called on to ing a financial service provider as a digital company. make bold decisions. A fresh start is realistic, because And that places heavy demands on the management. they can still build on a large client base, the trust of Restructuring takes time, swallows resources and their clients and the expertise of their staff. Even so, provokes resistance as the company breaks with tra- comprehensive digital transformation will trigger ditional structures. For all these reasons, top manage- seismic shifts, the like of which the organizations ment must also be a model of good leadership: It concerned haven't seen for decades. Especially in the must convince staff of the need for change, encourage retail segment, the outcome will be extensively digi- them and get them to buy into a challenging transfor- tized processes and a business model that is much mation phase. Essentially, digitization is a job for the more flexible, open, client-friendly and efficient than boss – a job that demands creativity, competency and the existing one. consistency. The comprehensive transformation strategy for es- Where management rises to the challenge of digi- tablished financial service providers – what we call tal transformation, three principles are of paramount Plan D – rests on three key pillars and involves specific importance: action in seven areas. G 14 THINK ACT End-to-end digitization

G PLAN D: DIGITIZATION FOR FINANCIAL SERVICE PROVIDERS Basic principles and specific actions at a glance

END-TO-END DIGITIZATION

Principles Actions

Identify digitization potential Rethink everything from the client's perspective Define an ambitious target scenario

Involve relevant units

Simplify and standardize Develop a sustainable digitization strategy products and processes

Break the project down into manageable work packages

Modularize product offerings Pursue a shared, cross- divisional goal Establish 24/7 service capability

Source: Roland Berger THINK ACT 15 End-to-end digitization

or ambiguous procedures can quickly become a dan- gerous trap, driving implementation costs through the roof at the expense of customer focus and efficiency. For this reason, end-to-end digitization should always go hand in hand with product portfolio adjustments RETHINK EVERYTHING FROM THE CLIENT'S and the simplification of both products and processes. PERSPECTIVE In other words, digitization involves more than just Today's well-informed, digital-savvy clients are used to digitization: It involves rethinking large parts of the roaming freely through the internet, sourcing informa- company. tion and actively contacting businesses. Accordingly, digitization strategies must target the early stages of decision processes. It is important to note that many clients do not start out by looking specifically for financing products, but instead search for corresponding information in the context of some other matter. Logically, therefore, financial service providers must likewise be prepared to break with conventional sales strategies. They must establish a presence at an earlier stage and/ PURSUE A SHARED, or add complementary value for clients during the busi- CROSS-DIVISIONAL GOAL ness initiation phase. Similar to the delivery status that This kind of goal must be a central component of ex- can be tracked at online mail-order firms, for example, haustive end-to-end digitization. To master the chal- financial service providers can "publish" the status of lenges, specialist departments and IT must take on their processes, thereby achieving considerable trans- clearly defined roles within the framework of a com- parency both in respect of clients and within the organi- mon strategy. The job of the specialist departments is zation. Taking this as the starting point, the client's de- to simplify and standardize products and processes, cision process must be carefully thought through from while IT develops digital solutions for clients, partners start to finish to avoid downstream process interrup- and administrative staff and tests the extent to which tions and – worse – disappointment for clients with high legacy IT systems can be adapted or new system solu- digital expectations. Provision must also be made for tions introduced. Where complex, inherited IT sys- the fact that many clients have already placed their trust tems and handling processes do not meet today's more in information portals, comparison platforms and inter- exacting requirements, the company must think about mediaries. Financial service providers too would do well appropriate IT modernization programs – even to the to accept these new partners: Closed proprietary mod- extent of greenfield solutions. els must give way to cooperative solutions that align with clients' behavior. These three key principles can be translated into specific actions that, taken together, stake out an end-to-end digitization strategy. The seven actions shown overleaf help financial service providers to proceed methodical- ly in order to drive the gradual but systematic process of digitization. For established players, "big bang" digitization solutions are often not a realistic option – if only because the complexity and risks are hard to manage, and because flexible readjustments in the after- SIMPLIFY AND STANDARDIZE PRODUCTS math would be even more harrowing. AND PROCESSES Customer-oriented digital solutions require simple products and processes. Attempts to simply digitize existing complexities, decision rules and multi-layered 16 THINK ACT End-to-end digitization

THE SEVEN ACTIONS AT A GLANCE focus on simple processes. Complex processes should only be worked on later. Compared to the "big Identify digitization potential bang" approach, this method minimizes project To prepare the ground for the comprehensive digiti- risks and simplifies the gradual replacement of lega- zation of products and services, suitable projects cy IT systems. It also makes it easier to get internal must first be identified. The company might, for ex- staff and external stakeholders to buy into the digital ample, choose to begin with a relatively straightfor- journey. ward and largely standardized mass-market product as the starting point for ongoing digitization, in order Modularize product offerings to realize significant digitization potential right from If digitization potential is to be realized quickly, it is the word go and create a lighthouse project. vital to base the existing product portfolio on standardized modules. This approach allows products Define an ambitious target scenario and services to be individualized and offered to clients To formulate a durable target scenario, it makes sense more flexibly – which is exactly what clients want. to begin with the typical customer journey. When do While the principle of modularized products is re- clients look for information? At what point do they garded as indispensable in mass retail business, this establish initial contact? When do they sign con- is equally true in high-end corporate client business tracts? The aim in developing this target scenario (such as the underwriting activities of credit and in- should be to seamlessly interlink every process step, dustrial insurers). without media interruptions. To make the scenario sufficiently ambitious, it is especially important to Establish 24/7 service capability reduce manual activities, define efficiency goals and Hardly any company can afford to ignore clients' in- keep an eye on the speed of processing. sistence on round-the-clock availability. Today's clients and sales partners expect financial service pro - Involve relevant units viders to be available online at any time of the day or IT activities should never be undertaken without mar- night – especially when they want to use mass-market ket-oriented objectives that focus them on efficiency. services. The company's aim must be to integrate all Sales units, for example, should contribute their necessary external partners, clients and brokers at ex- knowledge in order to identify client behavior, rele- actly the right points in the digital information and vant client needs, competitors and digital sales part- transaction flow, give them fast, dialog-based feed- ners (such as comparison portals and brokering plat- back and, where possible, notify them of automated forms) as early as possible. decisions.

Develop a sustainable digitization strategy There is more to end-to-end digitization than merely getting existing products and processes digitized from start to finish. A sustainable digitization strategy must also pay proper attention to secondary processes such as controlling and reporting tools. Intro- ducing a continuous improvement process can also be a useful way to regularly review the sustainability of the implemented digitization strategy.

Break the project down into manageable work packages Given the complexity of the task in hand, end-to-end digitization should be implemented one step at a time. Automation and digitization should initially THINK ACT 17 End-to-end digitization The acid test. Rigorous end-to-end digitization improves customer focus, competitiveness and process efficiency.

How can routine credit decisions become a lean, end- INCUMBENT FINANCIAL SERVICE to-end digital process? And how do the participants in PROVIDERS MUST ACT NOW the process benefit? End-to-end digitization is a precondition if established financial service providers are to have a future and stay EXAMPLE: S&L CREDIT PROCESS competitive. Clients' behavior is changing radically, in- To deliver an integrated client experience, the import- creasing the pressure on the industry and forcing it to ant thing here is to link the primary financial service to demonstrate its innovative capabilities in the arena of other context-sensitive offerings (such as a real estate digital transformation. But the clock is ticking, and portal). This can attract clients to the company's own companies have less and less time in which to act. New product portfolio very early in the information gather- players are aggressively joining the fray, armed with ing process. more than just digitized existing business models: A seamless savings and loans (S&L) client journey Fast, lean process handling positions them as the part- enables significant client benefits and efficiency gains ner of choice for digital-savvy clients and is helping to be realized from front end to back end. The automa- them to continually enlarge their market share. To tion of back-end checking rules, for example, opens up stand up to this onslaught, the incumbents must re- a new client experience: Once clients have entered or spond swiftly and on a broad front by digitizing what submitted their data, they can quickly receive notice of they do from end to end. Companies that miss this op- the acceptance or rejection of their credit inquiry, ei- portunity run the risk of falling by the wayside as the ther in the bank branch or online. Such gains in effi- competitive race gathers pace. ciency pay dividends not only for the client: Depending on the complexity of the product, end-to-end digitization can automate as much as 90% of existing application and portfolio processes, such as data entry, contract processing and master data maintenance. H 18 THINK ACT End-to-end digitization

H CHAIN REACTION Concluding S&L contracts as an end-to-end process

DIGITAL CLIENT PROCESS SUPPORT

"I'll gather my own Information Online integration in internet-based information first" information portals Careful guidance to suitable products

"I'm looking for Initiation of consulting Integration in independent brokering independent advice" platforms Seamless media transition between consulting and transaction

"I use modern Consulting consulting formats" Tools and data to support consultants Consulting via all channels (including video) Paperless recording of all necessary information

"I want to know where Signing the contract Based on paperless information, largely I stand – quickly!" automated decision in the back-end system and creation of a loan Immediate notification to the client

"I want to finalize my Portfolio Interactive online "self-care" options for decision immediately" clients

Source: Roland Berger THINK ACT 19 End-to-end digitization ABOUT US Roland Berger, founded in 1967, is the only leading global consultancy of German heritage and European origin. With 2,400 employees working from 36 countries, we have successful operations in all major international markets. Our 50 offices are located in the key global business hubs. The consultancy is an independent partnership owned exclusively by 220 Partners.