Digital transformation is a key component of every fast-paced business environment. As technology continues to move forward, companies that do not adapt to the changing milieu will be left behind, including in the financial and industrial sectors.
The Financial and Industrial Sectors
Finance is a traditionally conservative sector, and the sensitive nature of the industry means it is often slow to change or adopt new technologies. However, it has wholly embraced digitalization. Allowing for the automation of routine tasks such as report generation, account reviews, and market overviews has helped streamline operations tremendously.
This frees up both human and financial resources for more value-adding tasks like improving the customer experience and completing expert, nuanced due diligence for better investment outcomes in both financial and industrial companies.
While financial and industrial digitalization might seem unrelated, the truth is that they overlap in a few key ways.
Here are three lessons manufacturing can learn from the banks about the importance of digital transformation.
1. Data Analytics Are Crucial to Staying Competitive
Data analytics are essential for improving operations and maintaining a competitive edge in both the financial and industrial sectors.
For banks, collecting and interpreting data helps them differentiate themselves in a homogeneous, competitive field. The more effectively they can analyze data, the more “marketing muscle” they have to increase customer acquisition, retention, and overall value.
Manufacturing is a similarly homogeneous, competitive industry so any slight edge can be exploited for significant gains. However, instead of leveraging data analysis for marketing more efficiently, companies use this data to improve throughput and production yield.
The overlap here might not seem obvious between the financial and industrial industries, but if you think of the customer lifecycle of a bank and the throughput and yield of a factory as essentially the same process, you can start to see similarities and understand the data analytics link.
For instance, developing new products and obtaining new customers are the most resource-intensive processes of manufacturing and banking, respectively. The more effectively these costs can be reduced and processes streamlined, the better the bottom line is. In both cases, data analytics provides the answer.
In a real-world example, automobile manufacturer Mazda uses advanced data analysis from its design and validation processes to build virtual versions of early-stage engine prototypes, going through multiple iterations to achieve better fuel efficiency and performance. Without digitalization, they would have to make expensive physical prototypes (50 percent of which would likely fail) and spend dozens of hours testing, recording, and comparing data before they could build the best engine, putting them too far behind competitors to stay in business.
In banking, the same processes are used to determine the best ways to attract customers and which financial models are the most reliable.
2. Efficiency Reigns Supreme
Both the financial and industrial industries rely on operational efficiency for a better bottom line and a more significant market share. For banks, this means constantly looking for ways to automate routine tasks, reduce administrative burdens, and provide faster, more convenient services to customers.
Industrial enterprises are often seeking the same things: better automation (improved production); reduced administrative burdens (less time and resource waste); and faster, more reliable ways to provide a high-quality end product (customer retention).
However, research reveals that, even now, 74 percent of industrial companies still rely on outdated legacy systems and manual-entry spreadsheets to support corporate decision-making. Not only is this a huge money sink since legacy systems become more expensive to maintain each year, but it also leaves considerable room for errors and keeps valuable information compartmentalized. This slows production yield and doesn’t allow for a holistic view of the company’s processes, causing your business to fall behind the competition.
3. Smart Technology Is The Only Way to Maintain Happy Customers and Employees
All of the leading banking and industrial companies rely on digital technologies like mobile apps, AI support, cloud computing, digital data collection, and integrated platforms to make all aspects of the job more straightforward and more productive.
Within manufacturing, finance, and other sensitive industries (e.g., government and healthcare), there tends to be a mentality of “if it ain’t broke, don’t fix it.” However, just because a system is functional doesn’t mean it’s “working.” Estimates show that companies waste at least half of their IT budgets (some up to 80 percent) maintaining old systems, leaving little room for investing in updated smart technology.
Additionally, businesses must weigh the risks of digitalization against the mounting dangers of clinging to legacy software. Not only does refusing to enter the digital age hinder growth and production abilities, but it also actively worsens your employee and client experience.
Younger workers have been immersed in technology since birth, so they expect a workplace that aligns with what they know and are used to. This is just as true in finance as it is in heavy industry.
Remember that Gen Z will make up at least 27 percent of the workforce by 2025, and they’re more willing than any other generation to leave a job that doesn’t meet their expectations, so your business must understand how to deliver a great employee experience.
Clinging to manual systems also makes the customer experience worse. Maintaining consistent production quality is more challenging, and throughput is slower, meaning you cannot provide the best possible end product for clients, even though your employees are working much harder than competitors with digitized operations.
Learn From the Banks: Digitalization is the Only Way to Survive for The Financial and Industrial Sectors
Aside from a better client and employee experience, improved bottom line, and overall more productive workplace, digitalization also helps protect your company against security breaches, boosts employee performance, and positions the business to quickly and easily expand in the future. The financial sector is one of the most conservative industries out there, and even it has embraced digitalization, so it’s time for industrial enterprises to follow suit and step into Industry 4.0.