Digital Failure? Try This Diagnostic Checklist

When a bank’s digital project fails, the tendency is to look at its delivery. The most obvious symptoms of failure—such as low adoption rates or lagging revenues—can lead to a false diagnosis that often points the finger at an external fault. But as we discussed in part one of this series, the causes of digital failure often run deeper: organizational misalignment, rigid strategies, and a lack of customer-centered design. So when an initiative fails, stakeholders can benefit from taking a step back to dig more deeply into the root causes of failure.

[Check Out the First Part in This Series: How to Diagnose the Causes of Digital Failure]

Strengths and Weaknesses

Several financial institutions—such as USAA, with its branchless model, or American Express, with its customer-centered design philosophy—have demonstrated areas of digital strength. But even the greatest successes in digital innovation and product delivery are generally coming to it piecemeal rather than as a result of end-to-end transformation.

That could be because the path to digital excellence is iterative, with a continual cycle of diagnosis, redesign, and rollout. Effective diagnoses of strengths and weaknesses are essential to these turnaround processes. Looking at the digital strength of a bank as an aspect of its health, there are certain capabilities that exhibit “digital wellness.” Here are some diagnostic themes we’ve uncovered:

Strategic alignment. This capability is a way of viewing the failed product or service in its wider context. Did it have sufficient support from senior management? Is digital pushed aside to a Chief Digital Officer working in a silo, or worse – a less-empowered middle manager? Does every function—from risk to marketing to customer service—see digital not just as nice to have, but as a core “do or die” imperative akin to fraud prevention?

Operating model. As we’ve seen, one common problem is the lack of a digital-first culture. Did this digital offering originate because you had a product and it needed a digital “feature”? Such an add-on philosophy may account for lukewarm reception. The healthy capability here is an operating model that conceives of products as digital from the start—not just because a digital rethink may look better from a marketing viewpoint. On a related note, can you handle iterative release processes in fast-moving product markets? How do you measure digital success? How many sign-offs are needed to get a change out the door? Health markers like these – agility, rewards, layers of authority and spans of control – are all important features in today’s changing digital environment.

Customer-centric design. Does the digital initiative offer a meaningful customer value proposition, or solve a new customer problem? For example, were customer complaints used as early input? When customers’ needs truly drive a product’s definition, adoption is inevitable, because customers can so easily switch from competitors. By contrast, a me-too product, regardless of marketing, offers little incentive to switch. Of course, to understand customer needs, you need a single view of them. You can’t offer products based on purely internal ideologies, and then try to blame their failure on your customers’ inability to appreciate your product’s benefits.

Underlying technology. Do you have the capacity to gain meaningful insights from analytics? Most banks are encumbered by legacy infrastructure. Is there a plan to retire old systems and invest in new robust capabilities? Citi is one of the banks making such investments, with its billion-dollar initiative focused on deployment of a unified customer platform. If you don’t make these hard choices today, somebody else certainly will - and reap the benefits at the expense of your digital health tomorrow.

Channels. Does the attention being paid to digital vs. offline reflect the reality of a digital future? Can all applications and functions be initiated and completed online? Can customers switch from one channel to another without a break in experience? Can customer service have a single view of clients’ online and walk-in interactions? Internally, is ownership of online and offline channels shared, or at least aligned?

People and talent. Do you have the right mix of specialists in technology, business, and delivery? Do you have good outsourcing or co-sourcing partners? For example, J.P. Morgan is actively pursuing Silicon Valley talent to lead its digital initiatives, rather than trying to fill the digital surgery role with traditional “country doctors” within the organization.

Needless to say, no organization or initiative will score perfectly on the diagnostic. But a high percentage of negative responses—especially if they’re clustered in a particular category—may suggest a likely factor in the root cause of digital failure that should probably be further investigated.

What To Do Next

Focusing on weaknesses may sound depressing—but it shouldn’t be. After all, the digital initiative has already failed. An effective diagnosis allows you to quickly find the deeper roots of that failure so as to avoid making the same mistakes in the future. Amid digital disruption, a common route to success is to fail quickly, and learn substantial lessons from each failure.

Once a bank has isolated the root cause of a failure, it can move forward with confidence on two fronts: It can take advantage of its strengths, which should also be clearly identified through examination of the themes above; and it will be able to build out offerings that maintain digital relevance. Meanwhile, it can invest the necessary time, money, and effort to rectify identified weaknesses and position itself for growth.

Broader Vision

Ideally, as in a 12-step program, a thorough, objective self-assessment is part of a broader effort to assess a bank’s true digital positioning. But sometimes failure is what’s needed to refocus the organization’s mindset. A digital initiative fails, and you wonder why—but rather than grasping for justifications, you can turn to a grounded diagnostic examination to direct failure-fueled adrenaline toward the factors that will lead to future success.

Fergus Gordon is a New York-based partner in the financial services practice of A.T. Kearney, a global management consulting firm. He can be reached at [email protected]. Femi Odunuga is a New York-based principal in the financial services practice of A.T. Kearney. He can be reached at [email protected].