What is Digital Transformation?
According to Gartner, “Digitalization is the use of digital technologies to create a new — or modify an existing — business model and provide new revenue and value-producing opportunities”. For example, gone are the days when one had to have a physical retail store to sell products, eCommerce platforms such as Jumia, and Konga in Africa allow small, medium and even large enterprises to have a virtual storefront, where they are exposed to millions of potential customers across without the limitation of geographical location. Social media platforms such as Instagram and Facebook allow these businesses to effectively market and promote their offerings to millions of potential customers, who have smart mobile devices with which they are able to connect with these businesses and conclude transactions from the comfort of their homes. These would have been impossible and extremely costly without digital transformation.
Digital transformation is not a one-off event, it is a journey and an ever-evolving process simplifying and adding value to an existing process, service or product. This explains why the technologies that support it are also constantly evolving, think of mobile devices which are constantly undergoing improvement resulting in new models with added features, bug fixes and improved features.
In Africa, the banking sector is one which has witnessed major transformation and impact on the consumers within the last decade. Banks in Africa are now able to provide better customer experience with digital banking i.e., using channels such as SMS, USSD, WhatsApp and mobile App to carry out transactions and activities including account opening, obtaining loans, funds transfer, bill payments and more. McKinsey reveals that the number of Africans with bank accounts has increased from 170 million in 2012 to nearly 300 million in 2017. This figure is expected to reach 450 million over the next five years. The sector’s revenues on a continental scale are expected to increase from $86 billion in 2017 to $129 billion in 2022 – All thanks to digital transformation.
Big Data and Digital Transformation.
Digital Transformation is what is responsible for consumers’ increased digital footprint across various touch points e.g., POS, mobile, CRM, smart TVs, social media etc. This in turn generates “big data” which offers businesses opportunities to understand their customers even better – their preferences, interests, behavioural patterns etc., allowing Businesses offer personalized engagements, deliver more meaningful experiences and ultimately better ROI needed for growth.
With technology solutions such as a Customer Data Platform (CDP), which has Artificial Intelligence (AI) and Machine learning (ML) capabilities, the insights which can be obtained from ingested data aggregated from various sources are limitless, and Businesses can enjoy several benefits including:
- Insights – When aggregated data is unified, businesses can gain a more holistic view of the customer, rather than fragmented data sets which may not give a 360-degree view when viewed in silos. Insights can help Businesses qualify customers further and target them for specific products e.g., for credit worthiness for loans.
- Lookalike modeling – with an understanding of an “ideal customer” business can identify other potential customers who have similar characteristics and behavioural patterns, and target them to gain much higher chances of conversions.
- Product recommendations – a better understanding of the customer and their user journey allows businesses to cross sell or upsell services and products; thereby increasing chances of retention and prevention churn. For instance, knowing a Bank customer who is now a graduate offering her a car loan service as against a student loan.
Even though some companies have been embracing digital before the pandemic, COVID-19 has been a catalyst for digital transformation. In mere weeks, businesses had to react quickly to enable remote working, shift to digital channels, and transform products and services to meet the changing demands of customers. However, those quick changes don’t always equal long-term success for a business as companies need to adopt digital transformation in their DNA to remain competitive and reap the benefits of emerging technological opportunities.