Why you should not fear Digital Transformation

“HSBC is to close 82 branches in the UK between April and September this year, claiming customers are turning to digital banking.”

This is the opening of an article published this week on the BBC news website. HSBC to close 82 branches

Less than two weeks after I responded to the FT article by Santander’s Ana Botin about the threat created by the BigTechs , another incumbent is blaming it on digital.

There is a real risk that digital banking and the digital transformation in general could become a scapegoat for post-covid restructurings that are inevitably coming.

It is undeniable that the switch to digital has massively accelerated during Covid, but it is only too convenient for big incumbents to make announcements that imply a direct correlation when in fact, the writing has been on the wall for many years.

HSBC’s representative is actually quite honest to confirm that “the number of customers using branches had fallen by a third in the past five years, and 90% of all customer contact was over the phone, internet or smartphone, in addition to contacts on social media.”

There has been a slow and progressive transformation, which is now accelerating. But the real problem is neither the pandemic nor the NeoBanks, but the massive burden of legacy IT and bureaucracy that has prevented incumbents from adapting their business models.

Although in this case the article mentions that there will be no job loss, another implicit fear with digital transformation is that automation and digitalisation will trigger massive unemployment.

This fear is not new, and each wave of industrialisation or automation has brought doomsday predictions about the state of employment. What is unique today is the scale, depth and speed of the digital transformation which makes the transition from all-human to all-digital interactions a very tangible reality in our day-to-day lives.

However, every coin has a flip side. Digital transformation, including digital banking is also creating huge demand for new kind of skills, expertise and competencies.

The boom in artificial Intelligence, big data, as well as predictive and behavioural analytics has created very high demand for a completely new type of jobs, where there is a clear shortage. Deloitte identified an AI skills shortage even before the pandemic and resulting acceleration in digitisation.

The real challenge therefore is for schools, government bodies and academic institutions to catch up with reality and adapt by updating and redirecting the curricula towards skills which are really needed and already in high demand. In parallel, corporates such as HSBC and many others, need to anticipate changes and help their employees to transition to the digital economy through continuous training .

What is creating unemployment is not the change or the disruption. It is the fear of change and the lack of anticipation about these changes.

More than ever, we should not fear Digital transformation but embrace it mindfully and ethically and prepare for it, because it is here to stay.


by Simon Tobelem, CEO, ARIE Capital Group