New PwC Report: Insurance, Banking Top List of Industries Appointing Chief Digital Officers
September 7, 2017
Like it or not, the buzzword “digital transformation” continues to get tossed around as if it were something we can check off a list.
In reality, companies often have multiple, uncoordinated digital projects underway, in different business segments, with varying objectives. That siloed approach can work initially, but it’s likely to produce inefficiency and suboptimal results toward larger, long-term strategic goals. Consequently, these ad hoc efforts are being eclipsed by a growing recognition that organizations can leverage their digital efforts more effectively with a centralized approach.
Enter the chief digital officer (CDO). A new PwC Strategy& GmbH study found that 19 percent of the world’s 2,500 largest public companies have appointed an executive to lead their digital initiatives. It’s a rapidly growing trend: The comparable figure in 2015 was 9 percent, and 60 percent of CDOs have been appointed since 2015.
Financial services companies are actively adopting this practice. The insurance industry reported the highest percentage (35 percent) of companies with CDOs; banking was third at 27 percent.
The research also noted that while financial services firms are making enormous investments in consumer-facing tools – from building mobile apps and robo-advice features to incorporating chatbots – they also are realizing the need to connect those corporate-driven brand experiences with the local agent and advisor experience. To that end, they’re beginning to shore up internal digital initiatives, such as investing in programs that enable their agents and advisors in the field to leverage the latest technology. The study notes:
“In this year’s study, the insurance, banking, and consumer products and retail industries have moved into the top four, as they seek not only to boost their customer-facing activities but also to more fully digitize their internal operations.”
CDOs’ professional backgrounds also are changing as the position gains acceptance. In 2015, only 14 percent of digital leaders’ primary career experience was in technology-related fields; the latest result is 32 percent. CDOs’ positions within their organizations also vary, but are typically high level. Forty percent are considered C-level, while 19 percent are vice presidents and 17 percent are directors.
The percentage of CDOs with marketing and sales backgrounds fell from 53 percent in 2015 to 39 percent currently. Changes in the role’s requirements are largely behind that shift, according to the study. As companies’ digital efforts mature and become more important, they need CDOs who are comfortable working with both legacy IT systems and newer digital applications. These executives also must have the organizational knowledge and political skills required to secure large technology investments and guide changes that lead to genuine digital transformation.
Legacy IT can pose a significant challenge for financial services companies, but replacing those systems rapidly isn’t always a viable option. Yves Tyrode, CDO of French bank BPCE in Paris, in the study cites the difficulty in managing complex legacy IT systems while simultaneously trying to develop and introduce digital solutions. BPCE’s solution was to leave the company’s CIO in charge of legacy systems so that Tyrode could focus solely on new initiatives. This approach allows the bank to minimize disruptions and introduce digital applications more quickly.
Read the full PwC Strategy& GmbH report here.
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