Blog 8 | Buckle up: Jump the curve to become a retail winner

By News, Retail

Within retail, the magnitude of disruptive trends typically increases during a crisis, while also speeding up their transformational impact by at least 3 years. For this blog post, IG&H specialist in digital transformation within retail and Piet Coelewij seasoned executive and board member in the retail and consumer sector have exchanged perspectives on how the Corona crisis may further transform the sector and how retailers can use this crisis to outperform their peers. Conclusion: Time to buckle up. In the Corona crisis digitally innovating customer experiences and jumping the curve is imperative to become a retail winner.

Crises accelerate the structural transformation of the retail sector
Reflecting on the 2008 economic crisis and what seems to be happening in the 2020 Corona crisis, we see each crisis accelerate the structural transformation of retail. In 2008, digital platforms proved themselves as a disruptive and superior technology-driven business model. This crisis demonstrated the resilience of platforms like Alibaba and Amazon as their business model is secured against economic fluctuation. In prosperous times they grow as a result of general economic growth, and in downfall they grow as a result of price transparency. Simultaneously, in traditional brick and mortar retail, the crisis set the stage for the further shake-out and consolidation driven by financially strong retailers (for example, the acquisitions of Super de Boer and C1000 by Jumbo). The crisis uncovered the weaknesses of the mid-market, particularly in non-food retailers. More traditional retailers differentiating in either the low-cost segment or the customer value-added segment were successful, whereas retailers that were stuck in the middle, encountered difficulties. Remember the news headlines of major store closures (such as V&D) during the recovery that followed? Since then, non-food retailers with a more differentiated positioning could grow, such as Decathlon, Rituals, and Action. In food, this crisis provided the market conditions for the accelerated emergence of Lidl.

The Corona crisis creates a new transformational wave
In 2008 we saw the end of the mid-market, with the further rise of digital platforms and growth of the differentiated low-cost and the customer value-added retailers. The Corona crisis will cause a transformational shift, very much driven still by platforms, towards true omnichannel.

‘We are now moving into the fourth phase of digital retailing. The first wave was about efficiency, where the capital employed in relation to cash generation of e-commerce was unprecedented. The second wave was personalization and customer experience. The third was the structural use of the network effect where an increase in parties linked to the network results in more value for the customer.’

Parties like Amazon and Alibaba have reinvested most of their profits into expanding their network and leveraging the network effect. Currently, we are in the fourth wave — the move towards omni-channel retailing, which will be accelerated by the current crisis. This means that retailers create (digital) one-on-one relationships with their customers and use the channels in an integrated way. E-commerce will have to become an integrated part of retailer, rather than a separate channel. As a result, we see pure players entering the realm of physical retail in a big way with examples like Amazon GO Alibaba’s Hema, and Amazon buying Whole Foods.

‘The next step in the blending of channels will happen as a result of customer-experience innovations that disrupt traditional customer journeys by integrating retail with other (online) aspects of life such as social media or entertainment.’

An example of this would be telling smart home system Alexa that you would like to purchase the jeans that a certain individual is wearing in a specific Youtube video.

The future is uncertain, but this crisis is more uncertain than others
The current pandemic is different from the 2008 economic crisis in multiple ways. In the 2008 crisis, there was a sudden and sharp decline of liquidity. Current levels of financial liquidity are high and interest rates are low. As a result, large (PE) investors will be driven towards higher risk investments which tend to be more transformational in nature. In addition, institutional financial systems (Central banks, IMF, ECB etc.) are currently significantly more resilient and are responding in a coordinated fashion, resulting a more stable financial environment.

During this pandemic, recovery is dependent on the speed and effectiveness of how we control the virus, making the duration highly unpredictable. In the case of a quick V-shape recovery, retail will experience a crisis, after which we will return to the preceding transformation path, but in an accelerated mode. In the case of an extensive U-shaped recovery, the crisis will be followed by great unpredictability, including the above mentioned opportunities for high risk investments.

‘In a U-shape recovery scenario, the balance in the market will be gone, which creates systems that are unpredictable.’

We see it as an overarching certainty that retailers, in this fourth wave, need to truly shift to a one-on-one relationship with customers and embrace a digital innovation mindset. The main goal, which needs to be worked towards continuously, is creating advantaged customer experiences and higher lifetime value. Speeding up these innovations must be facilitated through the use data and technology such as AI.

’Retail survival of the fittest speeds up during crisis periods’.

To provide some guidance to become an innovative retail winner, we identified several fundamental shifts that you need to strongly consider.

Shift 1: Overall value trends
How to enhance the overall value perception of your customer experience

Traditional retailers must run a different race than the big platforms. Since competing at the scale and price levels provided by the platforms is not realistic, a differentiated angle must be found through providing compelling and integrated value propositions to specific target groups addressing specific needs. Companies like Decathlon, Uniqlo and Trader Joe’s show a way to do this.

  • In the Corona crisis, personal hygiene and health trends are getting an instant boost.
    The nature of the current crisis has a significant impact on hygiene and health concerns. Not only do retailers need to take precautions in their operation that will impact how they do business, it will also impact what they sell. An increasing amount of health focused products are finding their way to the market. There was already a move towards more health-conscious purchasing behavior, and this will get a sizeable, and long lasting, boost as a result of the current pandemic
  • The ’new normal’ will accelerate the shift to convenience 2.0.
    New services facilitate the step-change towards next level convenience. In food, this crisis accelerates the shift towards constant and easily available (semi-)prepared meals at any time, offered at decentralized (smaller) stores or food delivery services. At the same time, convenience also means the shift from DIY to DIFM or a subscription form for recurring needs like contact lenses. In order to avoiding crowded places, this crisis increases the movement of customers towards retailers who provide a quick, nearby, and non-crowded environment, with technology as a key enabler. Concepts like pick-up points and stores without check-out (Amazon GO) will get a growth boost. You only need to look at more advanced Asian markets to see the full potential of convenience.
  • This crisis makes consumers demand retailers to take responsibility for people and planet.
    The Corona crisis accelerates demand for sustainable products, both in terms of planet and people.

    ‘The youths of today are the first generation who actually changed their buying behavior based on their ideology.’

    As a result, retailers need to re-consider topics like value chain responsibility and local sourcing. Retailers now innovating their products and experiences to build on these trends are likely to jump on a new growth curve.

Shift 2: Innovation of business models
How to differentiate customer experience through innovation of business models and services

In this crisis we see an accelerated transformation of technology-enabled customer experiences in retail. This trend was already underway, with platforms often showing the way. Here we reconnect to the fourth wave of digital retail laid out above. For example, marketplaces and platforms are facilitating product and price transparency and customer personalization whilst remaining flexible. This crisis further highlights the weaknesses of traditional players who struggle to (digitally) innovate.

  • The Corona crisis will accelerate the shift to personalization and true omnichannel.
    Once again, this crisis will shift how consumers perceive value. Where price and quality used to be a differentiating factor, it is nowadays conditional. You cannot compete when the price-quality ratio is no longer competitive. Retail winners of this crisis do not fall back to old ways to manage price and value perception, but rather will seek to customize through individualization and personalization. Retailers must enhance their customer experience through personalization of value to emerge strongly from the current crisis. As mentioned above, this means that as part of the fourth phase of digital retailing, retailers create (digital) one-on-one relationships with their customers and use the channels in an integrated way. E-commerce will have to become an integrated part of retailer, rather than a separate channel. As a result, we see pure players entering the realm of physical retail in a big way with examples like Amazon GO, Alibaba’s Hema, and Amazon buying Whole Foods.
  • Acceleration of e-commerce pure players at the expense of crowded retail areas.
    Shopping malls and high streets have been struggling with declining numbers that seem to be shifting towards e-commerce, for quite some time. The concerns surrounding the Coronavirus have magnified this trend and we can see fewer consumers going back to crowded retail areas in countries where quarantine restrictions have been lifted, like China. This crisis provides a tipping point for e-commerce, as we discussed in our 3rd blog post of this blog series. It accelerates the position of pure players like Picnic, Bol.com and Amazon, and is likely to be the basis for higher autonomous growth of players with advantaged e-commerce.
  • Create digitally enabled one-on-one relationships, become a partner for life.
    The relationship between retailers and their consumers was already changing. Brands that were becoming a partner for life by providing services, in addition to their products, that enhance the consumer experience have a competitive advantage in times of crisis more than ever. We see many examples of brands, for instance, in sports, fitness, and food service, who use this crisis to deepen their digital customer relationship. Large amounts of data and the ability to use that data to create personal profiles are needed for this shift. Whereas large platforms are constantly improving on their already existing capabilities in this field, these same capabilities are increasingly more accessible to other parties through means of Software/Technology as a Service business models.

Shift 3: Consolidation and collaboration
How to accelerate innovation of customer experience through consolidation and collaboration

Earlier crises gave way to further industry consolidation to build market presence and scale. This crisis will not be different because the sector is in a transformation towards digital enablement, blurring and moving towards the creation of larger ecosystem. Businesses are increasingly competing with one another, whilst at the same time being dependent on each other. Retailers no longer need to develop a fully standalone business with accompanying scale and capabilities. Collaborations, networks and platforms provide access to new costumers and skills, but also increase the level of direct competition. For instance, Zalando uses Amazon Web Services but at the same time is in direct competition with Amazon. We are moving from a fragmented landscape to interconnectedness. Here, the right to play requires data and technology to be on par. This does not mean every company needs to participate by themselves. Large investments in the in-house development of technology are no longer necessary, since advanced technology is widely available (TaaS). Therefore, ‘the questions retailers need to answer is how to use their own capabilities and how to acquire the capabilities they are missing to enlarge their competitive advantage on customer experience.’

  • Leverage the power of collaborations and networks.
    Prior to the crisis we already saw large ecosystems forming around the leading platforms. Networks were formed by increasing the amount of connected parties and thereby its reach and proposition strength. To take advantage of these networks and their beneficial effect, retailers need to position themselves within these networks and ecosystems and create partnerships When the number of players in a network rises linear, the value of the network will rise exponentially.’ Examples of gaining new ways to reach customers through collaboration can be found in the institutionalized partnerships between Albert Heijn & Takeaway.com, HEMA & Jumbo, and Wehkamp & BCC.
  • Acquiring new digital skills through collaboration or acquisition.
    It is a core capability of winning retailers to be able to identify and realize synergies through collaborations or acquisitions. This crisis however emphasizes the need to access new digital skills needed for innovation and different ways to reach your customer. For example, we see acquisitions of digital and data analytics skills such as Lidl by getting into cloud services with the stated intent to compete with Amazon Web Services, Nike acquiring data analytics companies, and brick and mortar retailers operating on the technologies provided by AWS and Alibaba.
  • Consolidation through Darwinian evolution
    Not all retailers will survive the crisis on their own. For retailers and Private Equity players with financial muscle, this crisis provides an opportunity to raise the game through acquisition and consolidation. Depending on the U or V shaped recovery the consolidation, the impact will differ. The strong will nevertheless eat the weak, yet the weak can indeed be very big. A rationalization in the number of retailers is a Darwinian consequence of the crisis. A very recent example of this is the fall of J.C.Penny, where Amazon has shown interest in (part) of their store network.

Buckle up, now is the time to act
Every crisis accelerates trends and creates opportunities. In that regard, this crisis is no different. However, there is a high level of uncertainty which is fully dependent on the effectiveness and speed of the measures against the Coronavirus. Even so, retail must prepare for the rapid development of one-on-one customer relationships to create a clear customer experience advantage. To be successful in doing so, you need to embrace digital business models and technology.

Jumping the curve is about creating a path of micro-innovations rather than big set innovations that take years to complete. Retailers that are able to integrate these micro-innovations and speed up iterations of improvement will become the winners of this crisis. The biggest challenge in doing so is changing the mindset of management to act now and alter what they are doing, rather than repeating more of what they have been doing in the past. Start now.

‘A digital transformation is a cultural transformation rather than a technological transformation. Just start. Every retailer can start a transformation and will gradually expand, where gradually can go on a fast pace.’

With special thanks to Piet Coelewij,

Robert Spieker
Partner at IG&H
E: robert.spieker@igh.com T: +31622791962

Authors
Myrthe van Hoek (myrthe.vanhoek@igh.com)
Jochem Jansen (jochem.jansen@igh.com)

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Mortgage Update | Q1 – 2020 | Strong first quarter due to an increasing number of people taking out refinancing and additional loans

By Hypotheekupdate, Mortgage Update, News

Utrecht, 18 May 2020 – The number of mortgages during the first quarter of 2020 grows by 22.8% compared to the first quarter of 2019. Also, the average mortgage value has increased, which has led to an increase in mortgage revenue by 28.4%. This shows that the COVID-19 crisis has not negatively influenced the mortgage industry during the first quarter of 2020. 

Download the IG&H Mortgage Update (in dutch)

‘The strong growth is mainly driven by customers that are willing to refinance and take out additional loans. Additionally, we see that the average mortgage value continues to grow. Those two factors accelerate the total mortgage revenue growth.’ according to Joppe Smit of management consulting firm IG&H. The average mortgage value currently amounts to 337.000 euros, which means that it has increased by 2.8% compared to the 4th quarter of 2019. The average mortgage value continues to increase for all groups, but the strongest growth (+5.4% compared to Q4 2019) can be found among existing homeowners who transfer to a new home. This indicates that the Dutch mortgage market has not yet faced the inevitable downturn caused by the COVID-19 pandemic. 

The amount of people that refinance and take out additional loans continues to grow
The major share of mortgages is still taken out by existing homeowners transferring to new homes, but the people that refinance their mortgage or take out additional loans have almost caught up with the transferors. The group of transferors expands increasingly (+45.9% compared to Q4 2019), while the first group displays a lower level of growth (+10.0% compared to Q1 2019). This results in a growth rate of 22.8% compared to Q1 2019 for the entire market. “The accelerated growth in transfers could be a response to an increasing interest caused by the COVID-19 pandemic. This group wants to utilize this window of opportunity while it lasts.” according to Joppe Smit. 

Downward momentum continues for banks
Banks, and specifically the top-3 banks, have not yet been able to reverse the existing downward momentum in Q1 2020. Their market share has decreased for a second quarter in a row. This means that the top-3 banks have a cumulative market share of 47.9%, which is the lowest point since 2016. Investment funds that enable non-bank lending take advantage of the downward momentum of banks by accumulating a market share of 19.9%. Munt continues to have the highest growth and secures the 4th spot. ING and Florius experience the strongest decrease this quarter. The downward spiral that Florius is currently facing, has made them fall outside the top 10. 

Industry collective Duurzaam Wonen
IG&H is one of the supporting organisations that have recently launched the industry collective Duurzaam Wonen. More than 80 organisations have joined forces to foster awareness for sustainable housing among customers. To increase awarenessmortgage advisors will receive formal education on sustainability. The collective aims to educate at least 80% of the mortgage advisors in sustainability by the end of 2020For the first time, IG&H reports about the activities and progress of this collective and will continue doing so every quarter. To date, 4,900 advisors have applied and, of which, 3,100 have successfully completed this programme. This implies that an additional 3,000 advisors must complete this programme to meet the industry collective’s goal for 2020 (10,000 advisors in total). 

We wish you great joy in reading this article and would like to invite you to respond! 

Joppe Smit
Director at IG&H
E: joppe.smit@igh.com
T: 06 2035 2438

Authors & data-analysis IG&H mortgage update
Annelies Stemfoort (annelies.stemfoort@igh.com)Brenno Baas (brenno.baas@igh.com) 

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Corona and client activation: do you play to win, or not to lose?

By Banking, Hypotheekupdate, News

Crisis. The view is shifting from a health crisis with an intelligent ‘lockdown’ to an economic crisis ahead. The IMF claims that this crisis will be as bad as ‘The Great Depression’. Is this the right time for you as lender to innovate, generate client value and make impact in society? 

Impact on our societal and economic reality will remain present for a long time 
The ‘new way of working’ has also made its way to the mortgage market because of the corona crisis. Mortgage lenders and advisors have paid a lot of attention to their own ‘corona protocols’ and the creation of a safe work environment in accordance with RIVM’s guidelines these past months. While the occupancy rate on intensive cares is decreasing, people in the Netherlands are looking forward to the 1st of June to grab a beer at the terrace in the new 1,5-meter society. The virus will remain in our midst until the development of a vaccine or medication. Therefore, the impact on our societal and economic reality will continue to remain large.

Lenders risk credit losses and need to prove client value 
The size of the economic impact is still unsure, but the effects have already emerged in several fields. For instance, expenses for travelling and leisure related activities have decreased significantly these past two months. From a macro perspective, the Dutch economy is expected to shrink with 5% till 8% in 2020. This has a direct impact on jobs and therefore the securities that employees have accumulated.

Whereas the mortgage market was an important cause of the previous economic crisis, mortgage lenders now have the right resources at hand to help their clients in this health crisis. As a mortgage lender or advisor, you can prove your added value now by helping your clients with questions and problems they are facing. Above all, now is the time to identify, limit and/or prevent potential financial problems of clients.

Contacting the right clients is of utmost importance 
As the economic outlook darkens and corona guidelines remain, client situations may change. Part of the clients will remain unaffected by the corona crisis. Another part is likely to lose their job but will manage to find temporary employment or have accumulated sufficient money to continue mortgage repayments. Especially elderly have often saved more money, on which they can rely on in these difficult times. And a part will lose their job and must deal with payment difficulties because of their fixed costs. These people might work in the travel or hospitality industry, possibly hired on a self-employed basis. As a mortgage lender, you can prove your added value to these groups by facilitating contact proactively and reactively.

Belief that you achieve more when you differentiate and personalise contact 
The need for information and support for mortgage payments differs strongly, which is why it is important to get in touch with the right clients. In practice, we see that a combination of data insights and principles from behavioural economics are very effective for setting up a differentiated client contact approach. A way of working based on data also helps to generate controllable management information.

Which clients need support and how do you efficiently use your resources
You need to know which clients to approach. Clients in the group that faces payment difficulties, ask for a different approach than the group that still has the savings needed to fulfil their payment obligations. Identifying who you are talking to helps to bring across the right message. It also matters how successful you are in helping clients with mitigating measures. In this way, mortgage advisors and lenders can use their limited time efficiently by sending an aimed message to the right clients. An example of how to combine both is shown in figure 1.


Figure 1: Example segmentation with data driven insight for clients with payment difficulties

Use machine learning for identification of the right client communication
The clients with an urge for help and the highest chance of success are in the red area (figure 1). Machine learning techniques are very effective to identify the right clients, whether it is for clients with payment difficulties or to identify the chance of success when mitigating measures are applied.

Machine learning can use a combination of historical datasets and expert judgement to make an estimation. In this way, characteristics can be identified of clients with a risk for payment difficulties, combined with the success of mitigating measures and this can be plotted against your client portfolio. This is no absolute truth, but it does estimate chances better with a factor of 2 to 3 compared to estimations solely from experts. Subsequently, you can develop feedback loops to keep approaching the right clients with great accuracy and a personalised message that fits their needs and activates them.

Client activation: using insights from behavioural economics 
When the right clients are identified, activating them is the next important step. We can use principles from Behavioural Economics to achieve this. These principles are already successfully being implemented in several places, for instance by our prime minister in his corona speeches. Behavioural Economics uses our knowledge of human psyche to push us in the direction of a preferred action. When it comes to client activation for mitigating potential payment difficulties, there are numerous possibilities. Examples on how to convince clients to perform a certain action are offering a limited amount of options, the majority principle or the ‘profit-or-loss’ framework. The feedback loop and the above-mentioned machine learning algorithms help to gain continuously improving insights into which actions and techniques are most likely to be successful for specific clients.

Conclusion: taking control and generating client value to win 
As a mortgage lender, you can take control in these times, generate client value and avoid or limit payment difficulties. You can do this by using the techniques mentioned in this article, from both machine learning and behavioural economics. By approaching the right clients proactively about their potential problems, you stress your added value as mortgage lender or advisor and truly play to win.

Contact
Joppe Smit
Director at IG&H
E: joppe.smit@igh.com
T: 06 2035 2438

Better safe than sorry: three points of concern for information security

By News, Pensions

In the beginning of this year the University of Maastricht University made the headlines; The university was paralyzed by a hack and eventually decided to pay a ransom. Cybercrime has risen in the last couple of years and is fastly adapting to the situation right now where many people work on remote. However, cyber criminals are not the only ones who pose a risk to business operations, for example, a fire in the server room or an employee who accidentally causes a data breach can lead to far-reaching consequences. What can you do as an organization to minimize these risks?

DNB’s assessment framework is a good basis for information security
In order to create a good foundation for information security, the De Nederlandsche Bank (DNB) has developed an assessment framework that can be used as good practice by financial institutions. As an organization, this is a good starting point: think critically about which risks you are applicable to your organisation, which risks you wish to accept and which risks you want to minimize. Draw up an information security policy and also record where the tasks and responsibilities lie. Having put this on paper the next step is to make it work in practice.

Information security from paper to practice
1) Be critical of yourself as an organization
Organizations often have too rosy a picture of how information security is arranged. Are the backups of the critical systems made according to plan? And should a backup fail, when will you be informed about this? Does the strict password policy apply to all employees or are there exceptions? As an organization it is important to ask such questions, to zoom in on the exceptions and the risks thereof and to demonstrate this. When proof has to be provided, it often comes up that it is slightly different than previously assumed.

2) Ensure a supported risk culture
Employees often know quickly enough how to bypass the security steps if this is experienced as too cumbersome or difficult. It is important that employees are not only aware of what is expected of them in the field of information security, but also understand why they have to do it. Unfortunately, in practice you often see that the awareness is fully and exclusively invested in employees with a risk function and that they quickly become a voice crying in the desert. Higher management must therefore clearly convey that information security is not something you do next to your day-to-day job, but is an important part of your work. IG&H has developed a unique method for the Plan-Do-Check-Act Cycle to ensure that the adjusted processes and risk thinking are properly secured in the organization.

3) Technology is your best friend
G
ood technological solutions are crucial in limiting risks. If it is user friendly and reliable it can relieve your employees. It is important here that you have clear view of the requirements you need and which action you will take if it is not technically possible to achieve this. Also, be aware of the exception to the rule and what risks this entails. Finally, use the information available in the technology and monitor it actively.

As can be seen from above, getting information security in an organization properly organized costs both time and money. However, the costs if you do not invest in this as an organization can turn out to be many times greater. For example, the University of Maastricht has paid almost 2 tons in ransom and British Airways had to pay a record fine of 204 million euros due to a data breach. As an organization, you also have to catch up in a short time. This is time consuming and a heavy burden on the organization. In short, prevention is better than cure.

Would you like to know more about information security or how we as IG&H can help your organization? Then do not hesitate to contact us!

Contact
Stijn Kroonen
E: stijn.kroonen@igh.com
T: +31622623708

Klaske Visser
E: Klaske.visser@igh.com
T: +31612887472

Blog 7 | CEO’s about their response to the new normal

By News, Retail

Through an exchange of letters, Marjon Kaper (CEO ANWB Reizen) and Erik-Jan Mares (CEO Zeeman) provide answers to four questions posed by Bram Gilliam and Jasper van Rijn (IG&H Retail), focusing on how they address and institutionalize the challenges and changes they are facing as a result of the corona crisis.

During one of his first press conferences on the corona crisis, Mark Rutte emphasized the measures introduced in our country were of unprecedent scale. All of a sudden, our main concern was focused on feeling safe, whether at work, in shopping streets or on holiday, something we never experienced before. Safety currently comes in the form of a 1.5-meter society. A society in which we always keep our distance and a travel ban applies to many countries. At the same time, the need for personal contact and interaction is bigger than ever, in order to motivate employees and retain customers. It feels like a contradiction and creates a challenge for organizations to add social value to their offerings. It does not only require adjustments in communication towards customers, on the shop floor and within the supply chain, but it also requires adjustments in the organization itself.

1.5-meter economy
Today, we are aware that the measures stabilizing the spread of the coronavirus will have a structural impact on our society. The Dutch government asked all branches to provide action plans on how to rebound business, while guaranteeing safety of customers and employees. A strict entry policy, clear store routing and high tolerance in rebooking of travel plans are examples of the rebound plans in your branches. Personally, it makes me wonder what the 1.5-meter economy does with the people behind these plans. I can imagine it takes various approaches and requires scaling up at different paces for every single business unit, from head office employees to front line staff and travel guides. This brings a high level of complexity.

What actions did you take to make your employees feel safe and secure?  

Erik-Jan Mares
This question takes me back to March 13th, the day that the coronavirus reached our country and things changed. Up to then, Zeeman only experienced some delayed inbound shipments from China, but from that point onward it became clear the virus was going to have a much bigger impact. To make things more complex, Zeeman is operating in seven different countries, all reacting differently.

The most important thing we did was communicate frequently to keep our teams informed and simply to show that we care. ‘We can imagine how you feel, that you are scared or uncertain and that you wonder why your store is open or not‘ – these are all examples of topics we wanted to talk about. We mostly worked with videos to get across a more personal message. Next to that, I personally visited 19 stores (1 in each of our Dutch regions) in the first three days of the lockdown to show our support and to really understand what was going on. An intensive, but very rewarding thing to do.

Afterwards, people felt a little more confident and at ease. In this crisis, safety and business continuity seem to be on opposing sides. This brings up a discussion which you can move away from or directly address and we tried to do the latter one.

Marjon Kaper
What a strange situation we are in, right? Who could have imagined that the entire organization (in our case over 300 colleagues) would work from home for more than two months? After Mark Rutte announced that we “should stay at home as much as possible”, we quickly arranged that all our colleagues, including the ANWB Reizen customer contact center, could work from home. In the first weeks, there was a lot of work to be done. As ANWB Reizen, we are active in tour operating, camping and leisure activities (a day out, walking and cycling in the Netherlands) and we run ANWB Golf. In a short time, we had to cancel all organized trips and activities, inform our customers and repatriate 2000 travelers from all over the world. All this was achieved from the attics, kitchen tables, or living rooms of our colleagues.

This experience made me realize that you do not have to be physically together to get things done, and that there are endless possibilities to work remote. I believe that leadership and creating trust are always important, but the physical distance created by this crisis poses the real challenge. In times like these it is more important than ever to be transparent and approachable. We try to create continuous insights into how we are doing as a company and emphasize that we are part of the larger ANWB, which is a healthy organization with healthy financial buffers. Also, we have continuous and open contact with the works council, having constructive discussions on a weekly basis. We regularly communicate to our people through vlogs and blogs and next week we will be meeting with senior management to catch up on the latest details. We have a great way to enable all levels of the organization to speak up on what is on their mind, through our internal social platform “ANWB talks”. The platform offers the opportunity to discuss and share all kinds of topics. This can be a specific group, in terms of interest, but also top down. We encourage colleagues to respond and interact here.  

Now, it seems that we can meet each other again soon, in person. We prepared a plan in which approximately half of the employees can come to the office, considering the 1.5-meter distance. We aim to maintain the efficiency that working from home has brought us, reducing travel time and traffic jams as much as possible. The office is increasingly becoming a place where you want to be, every now and then, especially to meet your colleagues, but not a place where you must be present every day to sit behind your desk at 8.30.


Leadership
Managing and supporting employees has become top priority in organizations due to the corona crisis. Organization leaders are called upon to lead organizations through the crisis. This requires a delicate balance between masculine (a directive and decisive approach) and feminine (focusing on connection and intuition) leadership styles. On the one hand, leaders must project calmness and control to remove uncertainty of employees. On the other hand, inspiration and trust must be projected to keep employees motivated and confident. We see examples of organizations doing their utmost best to inform and involve employees. For example, CEOs who take the time to share thoughts and developments with their organization through weekly of even daily video messages. Moreover, we see decisions being made fast and decisively, for example in expanding e-commerce capacity.

In your opinion, what are the key leadership traits you rely on in times of crisis?

Erik-Jan Mares
My preferred leadership style is to give trust and responsibility to the team. However, in times of crisis, I temporarily switch to a more directive and decisive style. The management team participated in a training last year, making the team well-prepared for this switch in style when the crisis hit our country. Still, we discussed as a team how to allow for fast decision-making and consciously decided that this would centre around very few persons only. I think the whole team appreciated this discussion, including myself.

One example is on the communication we discussed earlier. I had a clear view of how I wanted to bring that forward, in what tone of voice and with clear focus on empathy, which I guaranteed by personally staying on top this. Currently, the responsibility is fully back with the team. So, if you ask me, the most important leadership quality required during a crisis is decisiveness, hand in hand with keeping the human dimension (‘menselijke maat’)

Next to that, leading by example is a practice I strongly believe in. You do not know what goes on in the minds of others, if you have not experienced it yourself. Creating visibility, showing that you care and starting a conversation. In this way the store visits I talked about earlier are very important for me as they provided a real opportunity to be in touch with so many people.

Marjon Kaper
In general, I do not think there is a big difference between leadership during a crisis or leadership during “ordinary” times. As a leader, I believe it is always important to indicate the direction in which the organization is going, that you make quick decisions and communicate them, as well as being approachable and accessible to your colleagues. The current situation does present additional challenges to the leaders of the organization. For example, communicating with the right tone or remaining visible and approachable, as mentioned above, are more challenging from a (physical) distance, when everyone is working remotely. As management, we write blogs and record weekly video messages for our colleagues. We also try to pay special attention to the social aspects of working, for example by organizing digital drinks. Fortunately, we are not unique in this and we see many organizations around us who do this.


Culture 
“Only a crisis produces real change”, economist Milton Friedman once said. Changes, which typically take years, are now gaining momentum. These changes become visible in many areas. There is an increasing demand in home delivery, children are following online classes and elderly know how to use digital channels. A similar movement is shaking up organizations. A digital working environment is slowly becoming the new normal, possibly bringing structural benefits. New partnerships arise, deeper as well as wider into the supply chain. These changes seem to be accelerated by employees showing a greater amount of decisiveness and focus. In my opinion, the challenge is to institutionalize the positive side of these changes to unlock a structural, more efficient way of working.

Could you describe how the Corona crisis changed the culture within your organization and how you attempt to institutionalize the positive aspects?

Erik-Jan Mares
The culture of Zeeman focuses on frugality (‘zuinig’), on genuine care of people, resources and society. We are a family business with a high level of involvement, acting differently and being a little bit headstrong (‘eigenzinnig’).

At the start of the crisis, the way of working at Zeeman changed drastically. It used to be slightly old-fashioned: for instance working from home was not done commonly. Currently – and I believe that this will continue after the crisis – attending a meeting at Zeeman is possible regardless of your workplace.

Next to a new way of working, the ability to focus on a few things only enormously increased. We have always been a very lean organisation with the ability to act quickly. However – now more than ever – our focus is on ‘getting things done’. We switched from thorough and deliberate decision making, to fast, less comprehensive, but still thoughtful decision making. Herein, the key is to focus. Prioritize and focus on the three things that matter most. An example is the application we use to share the videos I referred to earlier. Within a week, we launched this application, an introduction which usually takes much more time. How to preserve these changes in the future is ‘the million-dollar question’, since the list of possible projects is already growing. Leadership can help in prioritizing and serving as an example. However, the main question is whether the organisation is ready and whether people are capable and willing to internalize this way of working.

Marjon Kaper
We definitely see acceleration in digitization. Some processes digitized at an accelerated pace during the past weeks and it is fantastic to see how skillful we have become with organizing digital meetings. A cultural change I observed, is that remote working has increased the need for trust that you must have in your people. I sincerely hope that the amount of traffic jams in the Netherlands will reduce, as a result of increased amount of trust and responsibility we give to our employees in deciding how, when and where to work. Now, the corona crisis reinforces that trust, even among managers who might have found this difficult in the past. I hope we can continue to assume that people are motivated to work to the best of their abilities. Ideally, we would only come to the office because we think it is valuable for certain activities or meetings, and not as a habit.

I also see positive changes in our way of working. We are in the middle of a transition of our internal organization and are merging a number of business components. Since January 1st, colleagues have taken up their new positions and we see that people are getting to know each other quicker and seek cooperation more easily since the crisis requires us to do so, for example in repatriating customers. The crisis is disastrous for our business, but it is an accelerator for our transition.

The big question remains, how do we hold on to these positive effects? Personally, I intend to never schedule a meeting again for which people require to be stuck in traffic; from now on I will always take that into account. I understand that this will be challenging, but in my opinion, this requires leading by example and persevere.


Social impact
While physical distance between people is greater than ever, social connection is intensifying. People look out after each other more. Spontaneous support initiatives for neighbors or local entrepreneurs arise and additional gratitude to healthcare staff is shown. Moreover, grocery shopping is no longer a daily activity, but a fulfillment of primary needs. The corona crisis puts society under a microscope, resulting in enlarged focus on the societal role of organizations. A study done by Nielsen, tracking changes in consumer behavior caused by corona, also indicates this. It shows consumers have an increased interest in the supply chain, demand increased transparency and prefer buying more local. Changes like this evoke reflection and ask organizations to think about what they truly want to represent. I am curious to what extent you reconsider your positioning in order to (re)connect to the changing world.

Does this crisis affect the role you want to fulfill in society and your company’s purpose? 

Erik-Jan Mares
Prior to the Corona crisis, Zeeman already had a clear vision of its purpose and role in society. Our way of working, with its human dimension, is who we are and what is being reinforced by the crisis. The paradox of balancing between people’s health/safety and business continuity is a topic we already discussed at Zeeman. When the government decided to keep the Dutch stores open, we felt the obligation to continue offering our products, while guaranteeing safety for employees and customers.

Another example is our CSR policy. We were already investigating how to reuse materials and increase local sourcing. From a CSR perspective, it makes no sense to circulate goods by sending them back to China to recycle. As a result, we need local facilities that can do this close by. The crisis confirms that the things we started are more valid than ever.

To be honest, the crisis is an opportunity for Zeeman to strengthen its position. We mainly focus on slow fashion, basic products that have a permanent rather than a seasonal profile and are offered at discount rates. The amount of people interested in slow fashion with great value for money might only rise as a result of the crisis.

All in all, I believe that our companies purpose together with the mentality of our people is going to make us emerge even stronger out of this crisis.

Marjon Kaper
The purpose and mission of ANWB is to let its members go out or get on the road, carefree and with great pleasure. By carefree, we mean for travelers, as well as with the least possible impact on the environment. For this reason, we compensate for CO2 emissions of all trips that members and customers make with us through ANWB Reizen. Obviously, this is not enough yet. We strive for further sustainability of the tourism sector. This was already our vision and it is strengthened by the current crisis. We do expect consumers to be more critical of travel organizations, airlines and hotel chains after the crisis, but we do not consider adjustments to our purpose necessary.

With special thanks to Marjon Kaper and Erik-Jan Mares,

Bram Gilliam
Director at IG&H
E: bram.gilliam@igh.com T: 0622564054

Jasper van Rijn
Partner at IG&H
E: jasper.vanrijn@igh.com T: 0653376760

Authors:
Myrthe van Hoek (myrthe.vanhoek@igh.com); Marijn Reiff (marijn.reiff@igh.com)

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Navigating through uncharted waters: from crisis management to forward-looking

By Banking, News

The big unknown of the corona crisis brings banks in uncharted waters. In order to weather the storm, banks need to make a shift from crisis measurements to a long-term solution. Although Dutch courts are hesitant to file unnecessary corona bankruptcies¹, the situation urges to make this shift quickly. Latest figures corroborate this urge, as they demonstrate that support already came too late for a rising number of companies. Despite crisis measurements, 2/3rd of the Dutch hospitality industry is now on the brink of bankruptcy².

This situation requires strong collaboration between entrepreneurs, banks and the government to find a solution that fits both the short- and long-term. In this article we describe how management can remain firmly at the helm, while navigating the bank into calmer waters.

Source: CBS, April 2020

Lessons from the financial crisis
The crisis of 2008 teaches us that having a forward-looking perspective will significantly increase the odds of a long-term survival. Research shows that just 9% of companies came roaring out of the last crisis³. Most companies battened down the hatches, while some continued to run a tight ship. Companies that dared to innovate, refrained from rigorous cost cutting and focused on efficient investments in their core business, jumped the curve and outperformed their peers after the crisis4  . Inspiring examples from last crisis are not only well-known tech start-ups (e.g. Adyen, Uber) but also traditional companies that were able to reinvent themselves (e.g. Lego, Domino’s Pizza).

Source: Gartner expo 2019, Barcelona

Although each crisis is unique, history shows that a forward-looking approach can be rewarding for every company.

Break away from crisis management, to focus on the future
While some companies are already adapting to the new 1.5m economy, most banks are still tangled up in crisis management. How can banks break away from crisis management and focus on the dot on the horizon?  In order to do this, fact-based decision making is paramount (see our previous article). This can be hindered by the fact that current forecasting models are not designed for these unprecedented times and are based on historical data.

At IG&H we notice that this uncertainty requires banks to accelerate their efforts to become more adaptive and data driven. Examples that we already see or you could think of are:

  • Next level digitalisation of key customer journeys as the new standard (e.g. digital signing of mortgage)
  • Introduction of continuous monitoring – providing both credit departments and entrepreneurs insight into their short-term liquidity need and longer term outlook (e.g. stress test app)
  • Call centre automation by use of AI and robot technology to reduce operational pressure
  • Data-driven lending – make application and review process for emergency loans data driven
  • Active use of dashboarding and Management Information to monitor large volumes of applications and keep track of progress
  • Strengthen financial restructuring activities to prevent clients from bankruptcy

Maintain your crisis execution power
A much-heard positive side effect of the crisis, is that a lot of companies have had a crash course in fast decision making and execution power – and found their true agility. The trick will be to maintain and nurture these new learned habits and embed these into your daily practice when social distancing restrictions will be lifted.

Start with data driven customer insights and learn by doing
No company can turn itself around overnight, but every company can learn by doing. For example, developing a data driven solution for emergency loans for SME (BMKB-regeling) could be the new blueprint for the long-desired digitalisation of all regular commercial lending processes. Data driven lending as a solution, not only to cope with Corona impact but also to control risk, improve NPS & sales and reduce costs after the crisis.

Because of the urgent need for survival for a substantial group of entrepreneurs, some parallels can be drawn with medical triage. Clients do need a quick fix, but only one that helps them for a long-term survival. To do so banks need to answer several difficult questions fast:

  • How can we determine which clients are in direct need and how to support them with forward looking perspective instead of a quick fix?
  • Which clients do not have a chance for survival?
  • How could we offer smart monitoring to our clients and what is the impact on operations, IT and client interaction?
  • What solutions would help clients to become financially more robust so that they can survive a double dip or any other setback?

By making the leap to becoming a more strategic partner in business for their clients, banks can be part of this long-term solution. And this might just be the key for banks to come roaring out of this crisis. By making their clients successful, banks become a true success themselves.

Contact
Bas de Jong
E: bas.dejong@igh.com

¹ FD, Rechters krijgen oproep om onnodige coronafaillisementen te voorkomen, April 2020
² Koninklijke Horeca Nederland, April 2020
³ Harvard Business Review, Roaring out of Recession, 2018
4  Gartner, Barcelona Expo, 2019

Unique Patient Evacuation Coordination management tool build with OutSystems Technology

By Health, News, Technology

IG&H, a partner of OutSystems with offices in the Netherlands and Portugal is coordinating the National Coordination Centre for Patient Evacuation (LCPS). The aim of LCPS is to spread the workload and care capacities across hospitals as effectively as possible. Therefor they needed to manage the available resources in each hospital and coordinate all patient transport movements across hospitals in real-time.

To avoid a possible catastrophic scenario, a management tool needed to be built very fast and with high standards of quality.

PECC was built with OutSystems by IG&H and became up and running in less than 2 weeks. This new centralized tool replaced shared files and whiteboards that were being used before. The result was impressive, not only did it improve the effectiveness of all staff involved, but is also created a new set of capabilities (i.e. auditing and reporting). The adoption by the users was almost instantaneous and the feedback that started to reach the Development Team was great.

The PECC application covers 119 hospitals in the Netherlands and Germany. PECC provides real-time overview dashboards and other web pages that manage the process of each patient’s transport movement. These include the workflow of identifying the criticality of each case, then finding the best hospital and managing the specific transport according to the situation of the patient. These decisions are based on 90+ different input fields, that lead to the most favorable solution.

Following the success of PECC, LCPS identified one other urgent necessity that could be tackled with Low Code, the result is the COVID19 NL-DE Kooperation Webportal and a tool managing the allocation and distribution of mission critical equipment like ventilators and IV-pumps called MedOps. The Kooperation portal has been built with OutSystems and is a web application portal that manages the availability of German hospitals to receive Dutch ICU-patients. Dashboards and web pages deliver the information that the application receives directly from the hospitals and transform it in a way that immediately shows the users the most useful information quickly and if needed that information can be drilled down to the required level of detail.

This solution was only possible due to the contributions of OutSystems by providing the necessary infrastructure, deep expertise and support, the Dutch Ministry of Health and the Dutch Army that helped defining the solution process, and by IG&H Health sector knowledge.

Contact
Nuno Pacheco
E: nuno.pacheco@igh.com

Blog 6 | Retailer-Supplier collaboration is crucial to successfully deal with uncertainty

By News, Retail

Having the right products available in the right quantity at the right time has always been important. However, the highly unpredictable and volatile period ahead will probably also proof it has never been more challenging.

How is consumer spending going to change in response to a recession? How is the 1,5m-society going to affect consumer needs and shopping behaviour and for how long? What will be the impact of new outbreaks on supply chains? These are just a few of the key questions that have recently made it to the boardroom agenda of retailers.

There is obviously no precedent to base the forecast on. What is clear, is that high levels of uncertainty and demand variability will remain a critical challenge for retail value chains. Most notably, supply chains with long lead times, large batch sizes and/or high seasonal exposure will proof vulnerable. These supply chains rely on early and precise forecasts, which are now virtually impossible to build.

What (not) to do
Unfortunately, some retailers have one-sidedly responded to the recent immediate loss of customer demand by cancelling orders (sometimes already produced), demanding substantial discounts or stretching payment terms.

Although understandable from a retailer’s cash perspective, pushing the problem upstream in the value chain is not a structural solution for the underlying challenge to match supply and demand in this Corona crisis. The current market dynamics require retailers and suppliers to collaborate in partnership and create flexibility and responsiveness on key strategic categories.

Some retailer-supplier combinations are responding in a more sustainable manner.

For example, some food retailers and their suppliers have managed to jointly respond to the recent surge in demand by eliminating side assortment, and thereby significantly increasing the production output of fast moving items.

And, in the fashion industry suppliers and retailers are working together to smartly de-risk the assortment by moving from seasonals towards basics and never-out-of-stock items.

For the more trendy and hence less predictable items, retailers and their suppliers are looking for a Corona-proof balance between product margin and supply chain flexibility, moving towards the latter one. Partial local sourcing, express logistics, smaller production quantities, and delayed order commitments are all discussed jointly.

Where to start  

Developing retailer-supplier collaboration to manage such demand & fulfilment challenges is complex and requires trust from both sides. Under normal circumstances building trust can take years, especially if the relationship has been highly transactional and predominantly price-focussed before. But, the current crisis creates the urgency and necessity to act immediately and decisively.

The three measures below are a starting point for retailers to initiate a collaborative response with suppliers to this Corona crisis.

1) Prioritise suppliers and categories based on commercial relevance and risk
The typical retailer has hundreds of suppliers and can simply not engage with every supplier on every category in great detail. Choices must be made.

Segmentation and prioritisation should be based on two perspectives. First, based on commercial relevance: what part of a retailer’s revenue comes from what supplier and what categories are most relevant for its commercial proposition? The second prioritisation perspective is a demand and supply risk consideration: how likely will customer demand deviate significantly from pre-corona levels and how likely will supply chains be disrupted?

A clear prioritisation of those suppliers that require more intensive collaboration emerges once both the commercial relevance and the risk of demand deviations and supply disruptions are understood.

2) Share and use data to understand how demand develops
Most demand scenarios are top-down and expressed in financial terms. In order to be able to make sensible decisions, it is necessary to have access to the latest demand information about the specific high-risk categories in focus and bring a collaborative team together around it. For example, the use of advanced analytics on real time (POS) consumer data can identify shifts in demand across categories and regions fast and at an actionable level of granularity. Simple dashboards on a digital platform accessible to the common retailer-supplier team can then help to facilitate the collaboration process.

Full transparency and constant communication with respect to changes in the demand pattern will enable the retailer-supplier combination to act faster.

3) Engage in a collaborative and constant dialogue
For many categories future demand is expected to remain highly uncertain. A large fashion retailer commented that the key in creating flexibility is to start thinking from the perspective of the supplier and listen to understand what drives lead time and complexity from sourcing to dispatch.

This is becoming even more relevant in this Corona crisis. Collaboration can result in the retailer committing to multi-purpose raw materials and production capacity (to ensure supplier ability to supply), whilst both parties have a dialogue on the latest possible production moment and its batch size (to prevent over and under stock of specific products).

We started this blog by stating that we foresee a highly unpredictable and volatile period ahead. We see retailers responding in various manners. Some seem to try and push their problems upon their suppliers, others seek to enhance collaboration with their suppliers and take an end-to-end value chain perspective in addressing the challenges posed. We believe the latter will emerge stronger as retailer-supplier collaboration will proof to be a crucial factor to survive this Corona crisis.

Contact
Ruud Schoenmakers
Partner Retail at IG&H
E: ruud.schoenmakers@igh.com
T: +31651319257

Jasper van Rijn
Partner Retail at IG&H
E: jasper.vanrijn@igh.com
T: +31653376760

Carsten Treur
Manager at IG&H
E: carsten.treur@igh.com
T: +31651150504

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Why is the Corona crisis similar to the introduction of the iPad and what can companies learn from it?

By News, Organizational transformation

The current Corona crisis leaves many businesses in a lot of uncertainty about the future. Many companies face a significant decrease in turnover. Interestingly, this shows similarities with the introduction of the iPad in 2010. Do you want to know these similarities? Read about why your organisation hato anticipate today, and about our three most important learnings. 

When the iPad was introduced in 2010, a publishing company predicted that the introduction of the iPad would cause a 70% sales decrease in hard copy magazines and subscriptions by 2020The online world was hardly existing back then and nobody knew how this would pan out. The magazine publisher had a decade to find a solution but was not sure about which direction to takeIn the current Corona crisis, many companies don’t know either: many of the short-term emergency measures will become the new normal, but which ones?   

Studies and empirical research describe the situation of these companies as complex. It is important to understand that complexity makes it impossible to predict patterns of the futureThe normal way of strategy forming is therefore not effective and organisations should seek alternative ways.  

The answer lies in conducting many safe fail experiments within a shared set of rules (boundaries). Safe fail literally means that it is “safe to fail”there are little resources invested and that it is easy to kill the experiment when not successful. When successful, the organisation should of course be able to scale up quickly. What we see in many organisations is that experiments are the opposite, they are just the first step of a giant roll out. The publisher in this case started a series of experiments in several countries on web fora, digital magazines, interaction with readers, and more things that we find common nowadays. It is an example of successfully adapting to new opportunities.  

So, start today with our three important learnings from this case: 

1) Accept uncertainty: When you accept the complexity, you accept that there is no cause and effect relationship visible upfront. Therefore, regular strategy forming processes do not work.

2) Set a clear purpose of your organisation and define rules for experimentingBe clear on the company’s purpose. For example, the purpose of the publishing company was to remain customer relevant in off- and online contentWe advise you to define specific rules (called boundaries in complexity theory) within which your company can start to experiment. Examples of these rules are

  • Experiments should always create customer value
  • Experiments should start small and develop quickly to a larger scale
  • Experiments should be bold with ambitious goals that innovate the sector  

3) Start bottom up experimentsStart experimenting within your organisationInvolve employees that are in day to day contact with customers, trust them with coming up with the right ideasCreate multidisciplinary teams to boost creativity and enable quick roll outs. Managers should delegate maximum authority to experiment teams in order to maximise productivity and ownership. Additionally, this enables managers to focus on staying connected, communication, and providing perspective. Read more about this in our recent blog on leadership.   

The theory of these learnings is the easy part, putting them into practice is hard. Keep in mind that you should never waste a good crisis, maybe your experiment teams will discover the next breakthrough innovation in your sector! 

 Are you triggered about the impact of complexity on your organisation and do you want to create momentum to get a head start? We are more than ready to help you explore new opportunities! On our websitewe will share more blogs, hand-outs and other materials related to the current Corona situation. 

Contact
Boy Knoef
E: boy.knoef@igh.com

Become a true Data Driven Organization

By Analytics, Banking, News

In Commercial Banking it is increasingly important that business processes are digital, data driven and can leverage AI. In the current times of unexpected change we see this magnified. IG&H data scientists observe that organizations who already transformed their processes now truly benefit.

Commercial banks are confronted with a sudden wave of SME client requests, changed risk drivers and changes in risk profiles. Banks want to help and need to figure out what (temporary) policy changes would be meaningful for clients. And also, what the impact of specific changes would be on the bank’s business.

Those who have already transformed their processes are now able to handle this situation much faster and more confidently. Their business processes are already more efficient and more consistent. And in the current time of crisis they also prove to be much more Scalable, Transparent, and Adaptable and they offer more options for looking forward in a smart way.

Scalable
Digital, data driven business processes with a high rate of straight-through-processing and where decisions are made (partly) by AI decision models, require much less human effort. Therefore, they can deal more easily with peaks in workload, especially in times when human capacity may be limited.

This benefit can only fully materialize when there are no bottlenecks in other parts with a crucial dependency. This stresses the fact that individual point solutions are not the way to go. The effective way is a transformation to become a true Data Driven Organization in People, Process, Data and Technology.

Transparent
Monitoring the impact of the current situation on the client experience, on process performance metrics and on KPIs is much more accurate and near real-time in a data driven process. This facilitates communication and coordination throughout the organization and allows management to take more effective actions.

For example: Dashboards can quickly be shared to observe what is really happening. Such as which teams have the highest workload increase. Or where clients’ payment behavior is most impacted.  Analytics can be used to signal early warning indicators such as trends and significant deviations.

Adaptable
AI decision models and business rules can be configured easily to effectuate policy changes like (temporary) higher risk thresholds, lowering the weight of specific risk drivers, higher or lower maximum values, etcetera.

For example: It can be easier to change a few parameters in a risk review decision model, than it is to communicate such changes to whole departments of specialists and coach them to quickly and consistently execute these.

Smart forward looking
Finally, AI decision models can be used to ‘test out’ different scenarios and evaluate very fast the likely effects on individual loans and on portfolio level.

For example: Changing the values of specific risk variables along the lines of different scenarios and observing the predicted effects, is being used to zoom in on those clients who likely require first attention.

AI models can be a very powerful tool to provide insight in likely future outcomes. A data scientist and business specialist who understand how the underlying machine learning works and on what data it was trained can provide a range of quick scan insights within a very short turnaround time.

IG&H’s data scientists and banking consultants continue to work with clients (especially now) to transform commercial banking organizations to remain competitive and benefit from being a true Data Driven Organization.

Would you like to talk about what you can do while your processes are not yet as digital and data driven as you would like? How you can best take the first step? Or how you can leverage your first progress and truly turn the corner to transform into a Data Driven organization? We are ready to help you explore and make data work! Just drop me a note!

Mando Rotman
Manager Data Science IG&H
E: mando.rotman@igh.com