– GOLD WINNER OF THE 2019 EXCELLENCE IN PRACTICE AWARDS –
Digital technology over the past few years has been developing faster than industries can exploit its advantages. In particular, traditional players with their roots in the pre-digital era must learn to adapt fast. When launching digital transformation initiatives, many organisations start with low-hanging fruit such as building a presence on social media and making their products and services available online. Yet real digital business transformation has to touch the organisation’s entire structure. It requires a new business model, and this is where companies often struggle and get stuck in implementing it.
Transforming Thailand’s oldest bank
In 2016, Thailand’s Siam Commercial Bank (SCB) embarked on a major transformation journey. It was SCB’s response to deregulation and intensifying competition, especially from new financial technology (fintech) players. Fintech firms were flooding the market with innovative mobile banking services, offering consumers speed and convenience. In aggregate, these trends were fast turning SCB’s traditional strengths – such as its extensive nationwide network of physical branches – into liabilities. As a result, the bank was facing a world of disappearing transaction fees, changing dynamics in lending and wealth management, new regulatory requirements and shifting consumer behaviour. The impetus to transform was clear. The main question was where to start and how to give the company’s 27,000-strong workforce the skills and tools it needed to tackle this huge challenge. In the words of SCB’s President and CEO, Khun1 Arthid Nanthawithaya, “The key to transforming our bank into a tech bank in the near future was enhancing the capabilities of our people.”
Achieving success in digital transformation Siam Commercial Bank / IMD Excellence in Practice 2019 SCB’s top management put forward three overarching objectives:
1. Give SCB’s workforce the necessary tools to take part in the transformation and operationalize big data and analytics as the bank’s key capability;
2. Start and guide a company-wide conversation about digital change and what it would mean for SCB, as well as provide a sense of alignment from top management down;
3. Introduce a data-driven, customer-centric culture of piercing through hierarchy and silos, thus allowing the bank to adopt a coherent digital business strategy.
Importantly, once it adopted sophisticated data analytics, SCB could enter uncharted service segments such as unsecured lending. This would fundamentally change the way the bank worked.
Same message, different audiences
To develop an integrated learning programme that would support this ambitious agenda, SCB partnered with IMD Business School in Lausanne, Switzerland. The bank urgently needed to develop a common vocabulary of digital transformation. The idea was to cut across every layer in the bank’s structure – from the back office right up to the C-suite.
In order to achieve this, the same learning materials were shared, but the delivery methods varied depending on the audience. For example, junior managers only needed to understand the concept of “bank as a platform business”, and this could be explained to them through a classroom discussion presenting specific examples.
Seasoned managers required a richer perspective, so IMD facilitated a site visit to the operations of China’s Alibaba platform. Senior executives wanted advice on how to forge collaborations with these platforms. Finally, within the bank’s top leadership, the strategic dialogue revolved around what it would take for SCB itself to become a platform business.
Ultimately, all segments of the workforce had to develop execution skills, engage in handson transformation projects and forge a shared organisational mindset. To achieve this, the SCB-IMD programme had to provide effective learning modules across a variety of platforms.
Moreover, SCB-IMD programme had to provide tightly integrate offline and online learning; boost discussions of real-life management situations rather than academic knowledge; and launch in-house coaching and train-the-trainer initiatives. Given that English is not a common medium of instruction in Thailand, IMD customised some of its learning materials by translating and adapting them to Thai, for rollout to thousands of SCB managers.
Making strides with digital
Today, SCB is on track to reduce the number of branches from 1,200 to 400 by 2020. Branch employees have been trained to act as relationship managers instead of processing documents. The digital customer base has become more engaged and is projected to expand from 9 million in 2018 to 12 million by the end of 2019. Meanwhile, SCB is driving innovation with the SCB Easy mobile app, with fast uptake suggesting it will have 10 million users by 2020.
SCB can now execute at a pace that it was not used to, but which is the norm in a competitive digital environment. With the main building blocks of digital transformation in place, it has set its sights on organisational restructuring to flatten hierarchies and introduce agile ways of working throughout the bank.
For customers, the results have been a game-changer. Real-time approval, no documents required, one signature only, and access anywhere – all unimaginable just a few years ago – have become the norm. Meanwhile, SCB employees have seen the fruits of their learning. They know that ambitious projects can be rolled out quickly, without internal fumbling, and that data can take the form of visual storytelling, instantly highlighting a customer’s needs.
As the co-designer of the transformation journey, SCB has felt a strong sense of accomplishment: it has built its own learning programmes and connected rank-and-file staff with several dozen senior executives who chose to coach, train and mentor their juniors. According to Khun Darakorn Pipatanakul, First Senior Vice-President, Future Leader Development, “At first, we thought it would be hard to motivate senior people to sacrifice their time and become coaches. But as it turned out, most of them feel that the experience has made them better leaders who know how to mobilise resources and skills within the bank.” Other senior executives have commented, “We can see the alignment across the organisation, and it allows us to have extensive conversations about where we are going with our strategy.”
The programme’s success has shown that meaningful organisational transformation has to start with a conversation that goes beyond hierarchies and boundaries. To take part in that conversation, people need “handles” such as shared frameworks, reference points and vocabulary. In addition, the way the frameworks are presented needs to be customised: some groups need only a basic understanding of the issue, whereas others require specific answers to highly specialised questions. On the logistical front, in a large-scale learning programme it is best to adopt an inclusive approach. Significant scale can be achieved by blending classroom learning, online and self-learning tools, and in-house coaching. In terms of the message, adapting means making sure that for any particular group, learning makes sense in their world – it must fit their reality, as well as both collective and individual experience.
Two years into the programme, hundreds of managers have attended courses and several thousands have completed online modules. The primary change is in how people at SCB reach out across hierarchies and structures to learn about, make sense of and execute the bank’s ongoing digital transformation. In addition, SCB has developed new knowledge and a culture of learning, coaching and mentoring that will continue to benefit the organisation well into the future. As IMD Professor Mikolaj Jan Piskorski says, “The learning we put in place has cascaded throughout the organisation.”