There is no digital transformation without a digital mindset: interview with ONESTOPTRANSFORMATION

A digital mindset underpins digital transformation

Hi Julian, in the context of banking, how would you define digital transformation, and how does it correlate with a digital mindset?

Digital transformation touches four different areas of banking. There are three visible areas: technology, processes, business models. But there is also a fourth invisible area: the digital mindset.

The digital mindset establishes the essential groundwork for the other three areas of digital transformation. It implies that a digital transformation is fruitless without a digital mindset. Because the best technology, the best process, and the best business model are ineffective if I don’t have the people to not only embrace these domains, but to enhance them.

What do you see as the key challenges for banks in digital transformation, particularly in terms of establishing a digital mindset?

The biggest challenge is understanding the “why” of a digital mindset. I can “touch” technologies as systems and collect data on their usage. That means I can quantify everything and optimize accordingly. This is part of the banking DNA.

A digital mindset, however, initially feels like a vacuum that you can’t clearly grasp. That’s why it’s so important to make the mindset quantifiable and therefore obviously developable. Achieving this requires scientifically valid diagnostics and customized learning formats. Consequently, the invisible aspect of the transformation becomes not only visible but also quantifiable.

Definition of digital mindset

What do you mean by a digital mindset and why is it so important for the success of digital transformation?

Digital mindset describes personality dimensions that are critical to the success in navigating digital transformation. So it’s not about software or programming skills, it’s about personality traits that lay the foundation for dealing with new technologies. These traits can be cultivated over time, enabling individuals to consistently and situationally acquire the right and relevant hard skills for digital transformation, such as the use of a particular tool.

A digital mindset comprises six distinct personality dimensions:

• Openness and agility vs. persistence: this digital mindset dimension describes how people behave when confronted with new or unfamiliar digital development opportunities.
• Proactivity and entrepreneurial action orientation vs. reactivity and situation orientation: this digital mindset dimension describes the extent to which people are motivated to proactively drive the enterprise forward with a view to the overall context of the organization.
• Creativity and design motivation vs. process loyalty: this digital mindset dimension describes the extent to which people are able to create and initiate meaningful innovations.
• Customer-centeredness vs. task- and organization-centeredness: this digital mindset dimension describes the extent to which the customer’s perspective is integrated in finding a new solution.
• Criticism vs. harmony orientation: this digital mindset dimension describes the extent to which people can take a critical look at their own actions and those of others in order to initiate constructive optimization.
• Dealing openly with failure vs. avoiding failure: this digital mindset dimension describes the extent to which people are prepared to deal openly with failure.

Establishing a digital mindset in banks

How can banks promote and establish a digital mindset among their employees?

Fostering a digital mindset within the workforce is effective when tailored to each person, as there’s no one-size-fits-all strategy that applies across an organization. This is because each employee has a unique digital mindset and sets out from their own starting point. Consequently, the individual digital mindset should be the starting point for personalized learning expeditions or learning paths.

These learning paths should be designed for the long term and incorporate a microlearning approach. A mindset does not develop overnight; it takes about nine months to achieve measurable change. During this time, it should be possible to integrate the learning content into everyday life. This works best with microlearning content, which is on average between 2 and 8 minutes in length and can therefore be seamlessly integrated into the schedule.

Moreover, employees have different learning opportunities that are best served by different learning formats. Consequently, the content formats, such as video, text or podcasts, should be varied and ideally, employees should be able to choose from different content formats for each situation.

Banks can aggregate the assessments of employees’ starting points anonymously and thereby gain insight into the digital mindset of the entire organization. This aggregation makes it possible to compare digital mindsets across different areas and departments, and also to measure it over time, for example, to see how the digital mindset evolves over a year or two. Such quantification enables data-driven decisions in organizational development during digital transformation.

Which new technologies do you believe hold the greatest potential to transform the banking industry, and how can they support the digital mindset?

There are numerous new technologies that hold significant potential for the banking industry. Currently, I consider artificial intelligence and blockchain to be the two most promising ones. Both technologies have the potential to radically alter value chains in the banking world and deliver substantial value to customers, ranging from smart chatbots for customer service (AI) to decentralized contracts (blockchain).

A digital mindset, in its various forms, is fundamental for the successful implementation and advancement of the aforementioned technologies. Different roles require and benefit from different forms of the digital mindset.

How can banks ensure that their employees develop a digital mindset to effectively use these new technologies?

Banks can create the necessary framework by implementing a dedicated digital mindset analysis and development program. Such a program should always begin by communicating the “why” of a digital mindset, followed by an analysis of each employee’s starting point, and then personalized, self-directed learning paths. The latter can also be enhanced with social learning formats, such as live workshops or Learning Out Loud circles.

What is the role of top management in promoting a digital mindset and digital transformation?

Without the involvement of top management, it’s much more difficult to foster a digital mindset. Top management is not only tasked with communicating the mindset initiative but, more importantly, with actively exemplifying mindset development.

When employees consistently observe top management integrating learning time into their daily routines and consciously prioritizing mindset development, it has a significant influence on employee motivation. This establishes the groundwork for building a genuine learning culture, which is crucial for synchronized mindset development.

However, the responsibility for development does not rest solely with top management or executives; all employees must embark on their own journey and can develop independently. Still, it’s the leadership example that sets the stage.

The future of the digital mindset in the banking sector

How do you envision the future of the digital mindset in the banking industry over the next five to ten years?

The significance of the digital mindset will continue to grow. The faster technologies and business models evolve, the smaller your chances of predicting the hard skills needed in the future. This means that developing a digital mindset is not just a top priority, but the only way to cope with the rapid pace of change.

However, this necessitates a rapid and radical rethinking of recruitment and talent development across the banking industry: shifting the focus from hard skills to mindset.

What trends and developments could shape the digital mindset in the banking industry in the future?

A number of groundbreaking new technologies will emerge in the banking industry in the coming years, changing fundamental business processes and models.

Dealing with this new technology requires all dimensions of the digital mindset. A technology that has been around for a long time and has found its way into everyday life will, from my perspective, become even more important in the future when combined with other technologies: mobile banking. Combining it with immersive media, for instance, could forge an entirely new advisory approach that sets a new industry standard as best practice. This necessitates a profound commitment to customer centricity and a willingness to embrace failure throughout every part of a bank’s value chain.

Why is digital transformation particularly important for regional banks, and what role does a digital mindset play in this context?

Regional banks often benefit from having cultivated strong relationships with their customers over the years or from being close to the customer at the onset of the customer life cycle. Today, this is achieved partly through personal contact but also increasingly through various digital channels.

As these become more integrated into our daily lives, (potential) customers will not only expect seamless online services that deliver significant added value but will also increasingly consider it a decisive factor when choosing a bank. Once customers encounter a seamless digital customer experience that delivers significant added value, they will consider it as the benchmark against which to measure all subsequent customer experiences. As a result, delivering a tailored digital customer experience is becoming an imperative for customer retention.

Due to their local proximity, regional banks are uniquely positioned to create a distinctive experience by blending offline and online services. Nevertheless, online services should not be perceived as an “add-on” but as the cornerstone of customer engagement. This signifies a paradigm shift for numerous regional banks. For this shift to be successful, the entire organization must see the benefits and be fully committed to them. The foundation for this is a digital mindset.

Thank you for the interview and for sharing your experience.