Mid-Office: The Final Digital Frontier?

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I have to confess that the first episode of this summer’s billionaire space race left me a little underwhelmed. Sure, Virgin Galactic’s Unity spaceplane was a rocketing and marketing triumph as Richard Branson and his team reached an altitude almost 85 km above the Earth’s surface and successfully landed 20 minutes later. However, the significant middle part of the journey – yes, the space bit –  amounted to just a few minutes of microgravity before the spaceplane’s rockets switched off and the craft began to glide back to Earth. Was I too demanding? Well, spare a thought for services companies like telecoms and banks who are struggling to deliver satisfactory digital journeys for their customers. They too are struggling with the significant middle section of their transformation adventure – the middle office.

We have written previously about the “gaps” in digital transformation projects which fail to engage customers in basic business work flows like onboarding(KYC), billing & collections, complaints, customer service, bereavements etc. 

These are the problems customers want solved but are not necessarily the functions receiving the investment and support required within the business. Instead, digital investment tends to focus on the front-office “shiny baubles” packaged in new mobile Apps, slick user platforms, AI Bots, etc. 

Also, just as rockets need fuel, digital journeys need data. The Big Data race has upgraded core business systems and legacy platforms to support the latest data warehousing structures and analytics. That’s all well and good but digital transformation is only as strong as its weakest link, and we already know there are “digital gaps” where up to 50% of budget is being wasted. Deloitte in a recent report highlights the challenges related to the “middle office” and references a galactic destination:

Organizations are well underway with digital transformation, achieving significant value from modernizing their front-office capabilities to more thoroughly engage customers. At the same time, they have modernized back-office functions to help streamline operations. Yet even with this progress, many companies’ digital journeys remain incomplete, as they have yet to address the challenges related to the “middle office,” what many are calling the “final frontier” of digital transformation. This diverse set of business functions are still primarily orchestrated through manual processes shored up by a mix of legacy systems and disconnected point solutions.

So, the final frontier of digital transformation might well be the middle office. We will spare you the Star Trek mission statement but will boldly state some Mr Spock logic – customers very quickly forget the dazzling sign-up experience if basic problems cannot be sorted further down the line.  Think about all those Apps on a customer’s screen and the increasing evidence that many customers do not engage with the App after the initial period of user excitement. Once those notifications permissions are turned off there’s a double-whammy of pain – important messages are not viewed plus your “lost” customer is generating no engagement data. The risk of disappointment is significant and clearly happening because the telecoms sector has shifted strategy. 

Many telcos are adopting a “digital second brand” business strategy – more than 200 of these sub-brands have been launched globally. Intriguingly, a McKinsey & Co report found that these new digital brands contribute approximately 25% of overall gross additional subscribers to incumbent operators within four quarters of launch. In the banking sector, it is no secret that the ‘final frontier’ of middle office digital transformation is in a different galaxy right now and that mobile Apps are still in basic banking/payments mode.

Our own banking expert, Frank Brennan stated in a recent article here:

The urgent commercial reality is that Digital Customer Collaboration is an essential tool for most businesses, including banking. And whilst most Banks may have launched their flashy new Mobile Apps, these are typically focussed on day to day banking needs and not on more complex customer journeys or other digital channels.”  

Middle office services are not flashy but critically keep customers engaged and not every franchise can simply launch a new digital second brand. Perhaps the more critical goal for digital transformation is keeping as many channels open as possible. The use of well designed, branded emails and website content are very powerful connection tools which can ensure the customer maintains App usage with relevant prompts. Again, Frank Brennan highlighted the value of interactive customer engagements in a recent Q&A session:

“We have worked on a number of ‘collaborative customer‘ projects recently involving regulatory and consent communications, debt re-scheduling, even the handling of sensitive bereavement processes. In many cases the business starts the two-way conversation by telling the customer something or informing them of an important change in a particular process.  Then, there is a request for something back from the customer, fill in a form, confirm an option or decision, whatever. This does two things – first, it moves the interaction and the journey further along the ‘complexity spectrum’ as Which50 would put it. Second,there is higher quality data being generated that can subsequently be utilised to improve the ongoing customer experience” 

There are real opportunities to deliver a positive customer experience by focusing on the “digital gaps”, even space. However, the neglect of the middle office is putting the entire customer journey at risk. What is required is a consistent two-way digital collaboration between the organisation and their customer, from Acquisition through Onboarding, Servicing and Retention – what we like to call the Collaborative Customer Life Cycle. 

It doesn’t involve rocket science and it’s not particularly dazzling, but it is critical. In fact we believe it is mission critical and perhaps in need of a little Captain Kirk treatment….

“Mid-office, the final frontier. These are the voyages of the 21st Century Enterprise. Its ten-year transformation journey: to explore strange new platforms, to seek out new customers and partners, and to boldly go where no bank or telco has gone before.”

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