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Banks need cultural transformation to become digital, Starling says

A cultural transformation is necessary before financial institutions struggling with legacy systems can complete a digital transformation, Starling Bank’s Chief Technology Advocate said in a panel.

The debate, an initiative from cloud-based messaging platform Slack, took place Thursday morning in London, and covered topics such as digital transformation, the future of work and how people collaborate and communicate.

digital transformation talk from slack

Slack hosted the panel discussion in London

The panel included Jason Maude, Chief Technology Advocate at Starling Bank, Flora Coleman, Head of Government Relations at TransferWise and Stuart Templeton, Head of UK at Slack, and was moderated by Chris Skinner, chair of the Financial Services Club.

Addressing digital transformation, Maude said he believes it is possible for banks to adapt, but it will be hard for them to do so.

“When I talk to people from incumbent banks, they say that what’s holding them back is legacy technology from the 70s, sitting in the basement, which they can’t replace. Starling is lucky because we started building from scratch.

“But what I think is important is not that we built our technology from scratch, it’s that we started our culture from scratch. We have a culture based on ‘we are building software – let’s work in a fully agile fashion’.”

“With digital transformation, what is really needed is cultural transformation. If the banks really want to use software as one of the main core competencies, they need to move to a culture which is much more agile. The transformation doesn’t need to come from the technology side, it needs to come from the business side; the managers need to transform,” Maude said.

Coleman from TransferWise added that companies often get the focus wrong when the culture is wrong. “The culture point is so important. You look at companies like Amazon, they’re described as radical, fast tech, super agile. But the reality is a massive, radical customer obsession.

“I think implementing customer obsession is really vital to digital transformation. But that relies on the cultural change of not outsourcing responsibilities and actually living the flat structure. A flat structure is not ‘hey, we got no managers, it’s all chill’, it’s empowerment from every single individual involved in the company.”

Another challenge for financial services has been a rush to capture customers, according to Slack’s Templeton. He said: “Banks, insurance companies, et cetera, are rushing to expand their digital offering so they can catch and retain existing customers and, ideally, also attract new ones. This ambition to change quickly to meet customer demand transcends industries and puts a big spotlight on organisational alignment and productivity.

He also discussed that fallouts can be seen across the industry – HSBC, for example, will be delivering on 10,000 redundancies – proof that the rush has created a strong ambition to change quickly.

Templeton noted: “Some organisations will perceive this as a threat while others see it as an opportunity. Regardless of if you have an optimistic or pessimistic lens on life, the reality is that most banks need to change the way they operate if they want to stay relevant in today’s digital age.”

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