Successful digital transformation requires not only technological change but also digital capabilities ranging from creating a strong customer experience to reinventing business models, the chief strategist for Shinhan Financial Group’s digitalization said Tuesday.
“One of the key factors that causes setbacks is an unintegrated digital business transformation strategy that leads to an ambiguous vision and goal setting,” said Sunny Yi, chief digital officer of Shinhan Financial Group, at The Korea Herald Finance and Investment Forum.
“Digital transformation needs much more coordinated effort and thinking process to come up with new products and new business models than digital optimization which is more to do with productivity and efficiency which all can relate to working cheaper, faster and better,” he said.
Kicking off the forum with the first session titled, “Why so many digital transformations fail?” Yi also suggested ways for companies to make their digitalization efforts more fruitful.
Deploying high-caliber talent with digital literacy capabilities is a critical success factor in transformation, he said.
Noting that disjunction between public, private firms and academics that often create roadblocks to digital transformation, the CDO urged the public and the academic sector to recognize the need for digital transformation in delivering not only long-term gains but also better customer experience.
As many companies are still focusing on short-term returns, Yi said that “a bold investment can ensure fast, efficient and orderly digital transformations in business.”
With a lack of investment, companies will only be able to achieve digitization, which transform nondigital content into formats computers can process.
The next step is the adoption of robotic process automation and the opening of digital branches to bring about “digitalization,” which will allow firms to transform document-bound process into systems that can be computer-operated. But firms can only realize “digital transformation” when they make large-scale investments in emerging digital platforms and services such as central bank digital currency ecosystems and artificial intelligence.
With the current COVID-19 pandemic accelerating the need for transformation, digitalization has become an imperative task for every industry. But many face a harsh reality. Some 70 percent of all digital transformation projects ended in failure, Yi said quoting a study conducted by McKinsey & Co.
US auto firm Ford’s digitalization ambition was met with challenges because its new entity on smart mobility failed to integrate digital transformation efforts with the rest of the company, he said. Despite its vast investment into the new venture, the company faced quality concerns in other areas, resulting in a sharp drop in share price and ouster of the CEO, he added.
“More often than not, companies make the classic mistake of overoptimizing the digitization process and becoming afraid to jump the next two phases. They just dwindle in the first phase,” Yi said.
Wrapping up the session, Yi introduced digital transformation strategies that Shinhan Financial Group and its subsidiaries are implementing.
To acquire new customers, Shinhan subsidiaries seek to attach their online sites to high-traffic lifestyle platforms so that customers can play games and conduct job searches while making transactions and shopping for financial products. Yi doubles as CEO and president of Shinhan DS, the financial IT service unit of the group.
By Park Han-na (firstname.lastname@example.org