Digital transformation and its effects on the competency framework: a case study of digital banking

This thesis is a qualitative study on how the digital transformation affects the firm’s competency framework in the banking sector. The aim of the study is to establish what are the differences between the firms of various degrees of digitalisation, and to use that insight to create a competency framework for a digitally transforming firm. The theoretical framework provides background to the notion of digital transformation and describes the specificities of the digital aspects of the banking industry. It illustrates three existing kinds of digital transformation: conventional banks with token digital services, digitally transforming banks with notable commitment to the digital services, and specialist technology companies offering focused financial services (commonly referred to as FinTechs); in addition to them, the fourth kind was predicted: a hypothetical exemplary digitally mature bank emerging from the described trends. The methodology outlines the research process. Three case companies were chosen to represent each of the three existing kinds of the digital transformation. The primary data was collected via interviews, with secondary data collected in the form of case companies’ job ads, annual reports, and media releases. The interviews’ goal was to define what are the legacy competencies common between the conventional and the digitally transforming banks, what are the shared competencies between the digitally transforming banks and FinTechs, and what are the lacking competencies that may become a trend in the future. The data analysis is conducted by applying Straussian grounded theory methodology; this required coding the data to underline the common themes that describe each company. The codes are grouped into logical categories; the analysis establishes the logical relation between the categories to highlight what concepts are the key consequences of the digitalisation. The findings and conclusions discuss that the case companies represent the three kinds of digital transformation quite accurately. This allows generalising the conclusions to the industry level. Case companies are compared: based on the commonalities between the case companies, a digital bank competency framework is compiled. This model describes the still relevant competencies (digital awareness and core banking), shared competencies be-tween banks and FinTechs (customer service and digital channels), and currently lacking emerging competencies (digital branding, agile management, employee learning). The study offers an industry outlook predicting standardisation of the back-end IT architecture due to the growing numbers of consolidation and regulatory environment, increasing importance of creating customer experience and value proposition as the key competitive advantage, and resulted in restructuring and changes in composition of the banking staff, with more full-time employees being industry generalists exercising greater operational agility