Using fintech to digitize value streams in financial services
A number of market developments are forcing financial institutions to reassess their competitive advantages on the market. One way to gain an advantage is to use fintech solutions to improve value streams, write Delta Capita experts Loes Bleijswijk and Wouter Pijl.
What is value stream digitization?
The concept of value stream digitization enables financial institutions to adapt to new market demands by digitizing and automating value streams to improve efficiency, and by decommissioning old systems.
With this approach, human potential – previously focused on administrative burdens – can be used for activities that create customer value. It helps customers to access real-time services around the clock, via multiple channels. Other benefits include increasing customer satisfaction, increasing competitive advantage, cutting costs and increasing profits.
Some organizations may lack the in-house technological capabilities to maximize the potential of value stream digitization. In this case, fintech provided by external technology providers may be the answer to digitize and improve the value stream of financial services, considering the costs and benefits of this decision to outsource your technology backbone.
The digitization process of the value stream
During the value stream digitization process, internal and external digitization opportunities are assessed in order to optimize existing business models and seize new opportunities. There are endless examples, including digitizing the value stream through low-code technology; replacing manual controls with automated API controls; or using artificial intelligence to determine the next best course of action for customers and employees.
At Delta Capita, we use a three-phase approach to value stream digitalisation:
Discover the options
The organization should consider its end goals, which will clarify how the value chain will look in the future and which requirements must be met. By asking the right questions about upcoming changes in collaboration, the organization enables shared determination of the target state, and it can determine how (improved) use of technology can help improve the value stream.
As you explore these options and technology solutions, you will experience where the technology capabilities and knowledge are sufficient to manage the new systems and where you can explore vendor solutions that can fill the gaps.
Design the possible
The desired target state is clear, but how will the organization get there? The next step requires the decomposition of selected use cases into a mapped value stream; a designed customer journey; service adjustment; specified HR capabilities; clear data requirements; and a proof of concept to validate necessary IT functions.
This approach reveals value stream impact and allows you to validate business cases and create a prioritized roadmap.
Deliver the solution
The final phase is about making it happen. The results from the two previous phases are collected in an approach plan. A “T-shaped” team is composed of a balanced combination of general and in-depth knowledge and experience. The roadmap has been converted into a backlog of epics, features and user stories. The agile development process has been kicked into motion, and progress is being tracked towards targets.
As the world continues to evolve, project teams should view all parts of the agile development cycle in the context of a changing vision, prioritization of selected use cases, and the designed customer journey. The key is to adapt plans as needed.
Lesson
Based on our extensive experience in digitizing value streams, here are five valuable lessons we have learned:
Standardization will reduce the time and cost of change
Standardization of processes and IT opens up the possibility of omni-channel experiences and significantly improves the speed of change and flexibility. Use cases show that costs can drop by up to 50%.
From low-hanging fruit to fine-tuned solutions
In line with agile methods, we believe in an incremental and cyclical improvement process. Never forget to balance the effort and potential result of the necessary change. Focus on obvious changes with immediate impact before focusing on complex changes with longer lead times. This will benefit morale and support for further changes.
Look beyond the technology
Successful value stream digitization requires a well-adapted target operating model. Without the right mix of people, processes and technology, it is impossible to deliver a convincing service offer.
Find suppliers with the right characteristics
The supplier’s capabilities – such as support and maintenance – are just as important as the chosen technology. Carefully consider a target card adapted to what you want to achieve, and discuss thoroughly with the supplier before making your final choice.
Build internal capabilities to remain independent
Organizations often lack the internal capabilities to manage new technology. This can lead to dependence on expensive external partners. Find the right balance between internal and external.
Conclusion
Financial services institutions that adapt their value chains to stay ahead will beat and outlast their competitors. Competition is fierce and change is the only constant. Successful use of fintech to digitize value streams will help finance deliver digitalised, automated, simple and easy-to-understand services with the flexibility to adjust. The result: an improved cost/income ratio and increased customer and employee satisfaction.
About the authors: Loes Bleijswijk is Head of Retail Banking at Delta Capita, Wouter Pijl is Head of Digital & Performance.
