Born digital vs adopting digital – the difference between Monzo and Barclays

Picture of Tiffany Roberts

Tiffany Roberts

Principal Consultant

Digital transformation is at the top every CTOs list. It promises better technology, faster operations, happy customers and most importantly business growth. As desirable as this list sounds, 70% of all Digital Transformation initiatives do not reach their goals. Of the $1.3 trillion that was spent on Digital Transformation since 2019, it was estimated that $900 billion went to waste.[1] Let that sink in for a minute – that is $300 billion per year of spend that has failed to deliver. However, the headline number is not the whole story – I suspect the breakdown behind it is fascinating, and bad news for all the large incumbents out there who are trying to fend off the new kids on the block. Little research has been conducted to understand the split between organisations that embark on Digital Transformation that were born digital, against those who have been around since before the Digital Age and are desperately trying to adopt digital practices.

When it comes to Digital Transformation, the playing field is far from level.

When comparing the clients I have worked with, there are 3 main areas that market-leading incumbents seem to struggle with that digital natives do not: communication, processes and a willingness to try things. In newer companies, tools such as slack are implemented from the get go and mimic social media chat forums, allowing employees to talk to each other frequently and informally resolving problems faster. Emails are reserved for more formal communication, whereas at my “older” clients I have frequently watched my inbox grow with a plethora of one-lined emails which could have easily been sent in a chat. Additionally, processes defined in a pre-digital era have been allowed to spiral out of control and it seems that little effort has been made to bring them in line with 21st century ways of working. There is also clearly a balance to be struck between not just throwing money away on idle whims and vanity projects against being able to try (and fail at) new ways of doing things; but I’ve worked with large clients where even if someone does have a good idea the crushing bureaucracy of getting an internal business case generated, reviewed, approved and implemented means that what was a good idea when it was first thought of is by now already over 18 months old without any benefits associated. An automotive client of mine took the viewpoint that as long as they continued to sell cars, the internal state of the business was secondary, however badly it seemed to operate.

Conversely, these newer, more agile companies battle with their much more established counterparts for customers and a slice of the market, with the hope that their shiny new product will entice customers to swap and stick. Often backed by speculative venture capital firms who lose no sleep over throwing money at their risk-based start-up spread-bets, they have little to worry about in terms of cash-flow. This recent phenomenon has been prolific in the banking industry where companies like Revolut, Monzo, Tide and Starling have seemingly made opening accounts, money transfers and spending analysis seamless. Millennials have been attracted by the sudden ease of access to a somewhat old-fashioned industry bound by regulation, whereas the baby boomers have acted with caution preferring to spectate from the side lines. This hesitation has not been aided by the countless public data breaches, online-only customer service (which is manned by chatbots rather than humans) and the continuous debate around whether they are actually a “real” bank at all. Right now it’s pretty even, but try taking a teenager into a high-street bank to complete a paper form to open their first account – you’ll quickly realise the trend is only going one way.

It seems that the separation between “technology” and “the business” is more prevalent, and dare I say it – only prevalent in incumbents – perhaps as a result of a generational divide or perhaps because they place less emphasis on operational agility. I’ve been speculating; do start-ups and businesses born after the digital revolution even call technology changes “digital transformation,” or is the adoption of yet another machine learning model simply business as usual? The split between the two seems non-existent; they work together intrinsically, as one simply cannot exist without the other. The uncomfortable truth is that Digital Transformation is only necessary where something isn’t digital to start with.