A critical priority: A digital- and future-ready workforce. As economies around the world become increasingly digital, one the most critical issues faced by organizations is to build a workforce that will meet future business objectives.
This is no different in the financial services industry. To meet the demands of digitally savvy consumers, many Indonesian banks have incorporated digital initiatives as part of their corporate (as opposed to IT-only) strategy. A 2018 report by PwC indicated that 66% of survey respondents – from Bank Pembangunan Daerah (BPD), joint venture banks, local banks, state-owned banks and Syariah banks – have developed their digital strategy as part of their business strategy.
Evidently, banks need workers with more digital-ready skillsets as they digitize. But with virtual banking heightening competition, are financial institutions doing enough to identify and develop digitally competent workforces?
A McKinsey’s study has shown that Indonesian consumers are very open to digital banking. Compared to other Emerging Asian markets, Indonesian banking customers is the second-most enthusiastic adopters of digital banking, only after Myanmar.
Fifty-five percent of non-digital customers said they were likely to use digital banking in the next six months. Will traditional banks sufficiently ready their workforces to capture a slice of this pie? Or will the purely digital players win?
One thing is clear. As digital technologies continue to fundamentally change the shape of competition and alter the way consumers live, work and play – all while workforce demographics continue to shift – financial institutions need to transform how they engage with and ready their workforces to optimize today and create a thriving tomorrow.
No. 1 HR Capability: Data-Driven Decisions
The question is how. Across the world and in Asia, business and HR leaders agree that data-driven decisions is the number one HR capability required to drive the future of businesses. Companies that want to succeed need to focus on harnessing the talents of the workforce. But without insights from big data and advanced analytics, workforce decision making is often based on a manager’s experience and intuition. This is valuable in the absence of big data insights. But combined, experience and insights will transform HR scenarios.
Hiring and reward will appear reasonable and fair. Managers will capture coaching opportunities and deliver them during critical times needed. Skill gaps will be accurately predicted and filled. And career paths will align the talent’s ambitions.
Without data-driven HR and talent management, the impact to business performance can be severe.
According to McKinsey, the relationship between the quality of talent and business performance is dramatic. In highly complex jobs such as information- and interaction-intensive work of managers or bankers, a study found that superior talent is 800% more productive.
That’s a lot to be missing out if the workforce is under-optimized!
Moreover, as automation increases in our evermore digital world, fewer employees would be in the value chain accomplishing tasks which are important and cannot be automated. This makes the performance of each employee more significant to overall business success. In such a landscape, financial institutions simply cannot afford to be eight times behind their competitors.
Leading Banks at the Forefront of HR Transformation
Fortunately, leading banks in Indonesia understand this compelling need.
Bank Danamon: Turning to Cloud to Generate New Value
Bank Danamon is one of them. For the bank, the biggest challenge in the industry is how it can serve customers better than others. Knowing that their people play pivotal roles in how the bank serves customers and compete, Bank Danamon has turned to technological innovations to digitally enable its 12,000 employees who are based mostly in Java, Sumatra and Kalimantan.
Why Cloud? No Hardware Investment, Real-Time Learning, Collaboration Anywhere
The bank has taken the leap to integrate all functions in HR digitally on the cloud – as opposed to doing so in a piecemeal fashion. Why cloud? A significant business benefit is the savings from not having to invest on hardware. The added flexibility for Bank Danamon to adopt specific business processes into the system is also an advantage. But what is critical to the decision is the agility it gives employees and Bank Danamon.
From recruitment to onboarding, learning and development to talent management as well as anything related to the management of HR, having the entire suite of HR tools on the cloud has allowed Bank Danamon to radically simplify HRM and work for all employees. Employees can gain access to business-critical knowledge in real-time. Teams can collaborate anywhere, anytime.
Reaping Benefits Quickly
The implementation has allowed the bank to refocus employees who used to manage HR administrative tasks to a more strategic work scope.
As Mr. Heriyanto Agung Putra, Director of Human Capital of Bank Danamon puts it, “SAP SuccessFactors supports [our employees] to make their work easier. The managers can manage their people easier and in real-time online… [They] can see the profile of their subordinates, so they know how to develop and when to coach their subordinates.”
He also highlights the importance of empowering employees so they can better serve customers in today’s competitive environment. For example, with digital learning and development, employees can quickly and easily access knowledge to serve customers better. He remarks, “Our employees are using digital to make it easier for customers. Customers can [transact with the bank] anywhere, anytime.”
Becoming Future-Proof
Mr. Putra notes the importance for Bank Danamon to catch up with the future of work as the younger generation such as millennials is growing and dominating their workforce. How aptly put as this is not only true for Bank Danamon or Indonesia, but across industries and around the world.
HR Transformation in Banks: The Time Is Now
For banks thinking about HR transformation, the time is now. Drivers like what Mr. Putra highlighted and more is spurring HR digital transformations in banks and other financial institutions worldwide. Including HSBC, an example worth mentioning as the bank is driving a largest-in-history, global HR transformation project – involving 275,000 employees and contractors across 65 countries!
To stay relevant to the digital consumer, attract and retain superior talent that drives business results and build a workforce that will meet future business objectives, HR transformation is no longer a luxury but a need right now. While it may be intimidating, the plus is that banks don’t have to go at it alone. Today, many experienced partners have the expertise and are armed with best practices to help financial institutions cut risk and boost returns.
For banks contemplating a large-scale transformation, Mr. Alex Lowen, Group General Manager and Head of Group Performance, Reward, People Analytics and HR Transformation of HSBC shares useful advice:
“Be brave. These programs are enormous, they’re very scary as you start them. We had lots of conversations with our management board. We got time with them on a regular basis to talk to them about what we’re doing, why we’re doing it, the risks of doing it, the benefits of doing it, what it means for the future.
We had moments where we wobbled, but we kept going and kept talking to them about it. I just think [it’s about] having that confidence, being brave, maintaining the conversation. You’ve got to have sponsorship and leadership in order to drive change this big, I think that’s really important.”
Yayan Wirakusumah is an SAP customer solutions manager.