Feb. 2, 2021 | InBrief

How financial institutions can reap the rewards of microtransformations

Digital transformation doesn’t happen overnight. Quick wins in the form of miscrotransformations are critical to long-term success

How financial institutions can reap the rewards of microtransformations

In uncertain times, financial institutions must balance the cost and scale of new technology implementation projects with the imperatives of serving the needs of their borrowers and employees working remotely. To achieve such a balance, a growing number are turning to “microtransformations “as a way to stage their digital transformation over time. 

These quick technology wins allow institutions to stay agile and customer-focused in a  marketplace rapidly shifting to the online world. It’s all about getting some “quick wins” under the belt, by implementing smaller, bite-size technology projects that can have a narrow but measurable impact on the organization.

It’s also about fostering rapid user adoption by not overwhelming end users with massive, multi-faceted transformational projects all at once, which may cause them to revert to old habits. Microtransformations allow the culture to catch up with the change, by establishing the building blocks—foundational knowledge at the user level—that can be slowly built upon over time. Staff are given the time and incentive to learn new processes and systems and will express enthusiasm if the changes demonstrate direct and immediate value in terms of time savings, increased efficiency, a better user experience or improved customer engagement, and satisfaction. 

Microtransformations allow institutions to accelerate time to value by tackling the highest ROI, least disruptive changes first, then layering on additional features over time. They steadily move the enterprise toward full-fledged digital transformation in manageable, cost-effective stages. Microtransformations are comparable to the Agile method of software development in which the developer commits to releasing a minimally viable product (MVP) on a regular, rapid cadence with continual, iterative improvements over time.

All this is possible at a lower cost than a full-fledged, top-to-bottom technology overhaul. When deployed via cloud-based solutions, many microtransformations can be done speedily and entirely remotely.

Here are five steps to take as you embark on your microtransformation journey:

1. Assess your pain points

The logical place to start is with a clear-eyed view of your organization’s most pressing challenges, coupled with an exploration of the solutions to best address those needs. Is customer engagement in the digital channel falling short? Then implementing a customer portal may provide the biggest return. Are back office inefficiencies causing you headaches? A full electronic document management and filing system may provide much-needed relief.

2. Prioritize needs based on ROI

Once you’ve created your wish list based on the most urgent challenges, it’s time to prioritize those projects that can provide the greatest and quickest return on investment. Apply metrics like increased revenue, portfolio growth, and reduced time to close when calculating which projects will have the greatest impact.

3. Determine your budget

In tough economic times, excess budget for technology changes is hard to come by. Be realistic about what your Association can handle, and what your Board will approve. In the short term, don’t bite off more than you can chew, and focus initially on identifying smaller projects that will deliver clear wins.

4. Create a road map

Once you’ve narrowed your list down to those mini-projects that can be successfully implemented and deployed over the next year, work with your chosen vendor and  implementation partner to come up with a realistic project plan that will meet your project goals, timeframes, and budgets. Make sure to factor in contingencies for extra training time, integration with existing systems, and other factors.

5. Begin your journey today

Don’t delay! Holistic digital transformation can feel like a marathon, but it can be accomplished as a series of shorter races. Organizations that focus on continuous evolution will be the most successful and resilient over time. The payoffs, even from small change projects, will rapidly accumulate and result in massive improvements.

The continued economic turmoil associated with the pandemic is making a strong case for more data-driven decisions, faster insights into portfolio and credit risk and the accelerated implementation of digital technology solutions in this virtual-first world. Microtransformations present financial institutions with a path forward in starting or continuing their digital transformation journey, even during these times of great uncertainty and fiscal restraint.

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