Embracing digital transformation with a digital factory

When Saudi Arabia’s Alinma Bank decided to embark on a digital transformation, it built a digital factory. This approach is one way companies can incubate innovation and model agile ways of working that can then provide a foundation for spreading these practices throughout the organization. At Alinma Bank, leadership focused on building digital capabilities that have allowed them to deliver disruptive digital solutions to a variety of customer segments. Sami Al-Rowaithey, Alinma Bank’s chief digital officer (CDO), discusses with McKinsey partner Sonia Wedrychowicz the value of adopting agile, attracting diverse talent, and putting the customer at the heart of everything. What follows are edited highlights from their conversation.

Building a digital factory

Sonia Wedrychowicz: Can you describe what a digital factory is and what it means to Alinma Bank?

Sami Al-Rowaithey: Essentially, it’s a platform to power up and deliver digital transformation. It’s a space to foster innovation, embrace new ways of working, promote transparency, encourage teamwork, and adopt agile ways of working, with the ultimate objective of rapidly delivering on our aspirations.

Alinma’s digital factory was established a little more than one year ago and is responsible for spearheading the bank’s digital transformation. It’s responsible for managing the entire digital structure and its associated strategies, business development, product innovation, experience management, performance management, and digital profitability.

Sonia Wedrychowicz: How did you go about establishing the digital factory?

Sami Al-Rowaithey: It was an exciting journey. We were contemplating different approaches in terms of how and where to start. We ultimately decided to start small and scale fast to minimize resistance and ease the adoption of new practices within the organization.

We started with a small team working on one project, and then looked at building a relevant operating model suitable for what we wanted to do—and for the organization as a whole.

We determined how the team would operate, the composition and structure of squads (teams), how the tribes (groups of related squads) were defined, and what practices and tools they needed. We started with one initiative and one tribe. One year later, we now have four tribes and around eight squads operating within the factory, independently delivering projects for various customer segments.

Another important consideration was how this digital factory would interact with the wider organization, such as IT, marketing, business, and other functions.

The third point we addressed was sponsorship, which is key, since we needed to be supported from the top of the organization to drive this massive transformation. So, we spent a lot of time communicating the values, objectives, and advantages of creating a digital factory to the whole organization. Finally, and most important, are our people. We looked for talent from different industries to inject new DNA into the bank that can champion this transformation.

Putting the customer at the heart of everything

Sonia Wedrychowicz: Digital factories often can feel different from other parts of an organization. How did you approach establishing an operating model that has allowed you to successfully innovate?

Sami Al-Rowaithey: We’ve embraced practices around empowerment and enablement and have encouraged our people to experiment and make mistakes. We want them to know that it’s OK to learn from mistakes and move on.

Transparency is key as well, so we always encourage our people not to shy away from speaking up. This gives us better visibility into what is happening on the ground and what support employees need from us to achieve their goals. Transparency also applies to customers, because it’s crucial to understand customers deeply to give them what they want, not what we think they want.

So, in order to develop propositions and solutions that resonate with customers, we’ve created a beta community to test our journeys, experiences, and products. Putting the customer at the heart of everything we do and always putting our people first are the two main ingredients for success.

Spreading innovation throughout the institution

Sonia Wedrychowicz: Do you think this new focus on delivering value to customers has radiated outside of the digital factory?

Sami Al-Rowaithey: In fact, yes, and very quickly. The technologies and tools we’ve embraced within the factory are now being adopted by the bank’s wider IT organization. And our marketing department is already working on establishing something similar to our beta community.

We created squads to bring all our people together in one space, on one floor, working as one team to deliver on products and objectives in agile ways of working. Now we’re seeing that model spread to other departments, like IT, retail, and corporate.

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The importance of diversity in the digital factory

Sonia Wedrychowicz: You’ve introduced a diversity transformation within the digital factory. Why was that important, and how have you achieved it?

Sami Al-Rowaithey: Let me explain our recruitment strategy. We wanted to start small but fast. So, we launched two parallel tracks, the first of which relied on vendors and contractors, to ramp up quickly. We also launched a parallel track looking for people to recruit within the bank, so we managed to scale up very quickly, in just a few months.

Because we also looked for talent outside the bank, we attracted people from different industries, like fintechs, start-ups, government, and telcos, to create diversity. In addition, we also looked at diversity in terms of background and nationality to stimulate creative thinking.

We are always looking for the most qualified people, and I’m proud to say that we have a lot of talented women in the digital factory. They comprise around 30 percent of our team.

Starting small and scaling quickly

Sonia Wedrychowicz: You said you started small but grew quickly. How did the digital factory approach enable you to roll out multiple projects at the same time?

Sami Al-Rowaithey: It was a big task. But we developed a digital-transformation strategy touching every vertical in the bank and covering the entire spectrum, be it digitizing customer experiences, improving multichannel delivery, enhancing our digital sales, maximizing the contribution of digital to the bottom line, or improving customer satisfaction.

Then we looked at venturing into new businesses, leapfrogging via innovation, and creating propositions to attract and acquire specific customer segments. We asked ourselves, “How do we go beyond normal banking? How do we embrace open banking? How do we build ecosystems? How do we leverage the external ecosystem to accelerate our digitalization agenda?” Many of these aspirations have already been translated into initiatives.

We have an ambitious vision, to be the fastest and most convenient bank in Saudi Arabia, so we needed to fundamentally change how we run our business and create an engine that constantly challenges the status quo by asking how business is conducted, how processes are defined, how experiences are reimagined, and how quickly we can deliver.

Since we needed to scale up quickly, one important principle we kept in mind was always to focus on delivering incremental value to customers while building the foundations. That’s why we managed to scale quickly and deliver on multiple initiatives in our road map.

Overcoming challenges around talent, mindset, and culture

Sonia Wedrychowicz: What kind of challenges did the digital-factory initiative face?

Sami Al-Rowaithey: I would pinpoint two main items. The first challenge was the search for talent, which is crucial, because without it, we couldn’t accomplish anything. We’re seeing a talent scarcity across the globe and found it difficult both to recruit and to retain people with the right skill sets.

The second challenge was basically one of mindset and culture. As you can imagine, it’s not easy changing the mindset within a large bank in a short period of time. That’s why it took a lot of time aligning with the wider organization to make them feel part of our success. So we brought them into the digital factory, collaborated with them, took their feedback seriously, and engaged and iterated with them.

That eased the adoption of the digital factory within the larger organization, minimized resistance, and made people more comfortable with us—because at the beginning, the rest of the bank viewed us as a threatening department here to take their jobs. But that’s all in the past now, and the organization-wide perception of the digital factory is extremely positive.

Advice for others on the journey

Sonia Wedrychowicz: What advice would you give to others embarking on a digital transformation?

Sami Al-Rowaithey: The first thing I would say is to not spend a lot of time trying to figure out all the details of the journey. It’s important to start quick, learn as you go, be flexible, modify, and move on.

Secondly, you need to be resilient and persistent. The journey will be full of challenges, but you’ll manage as long as you always keep the final goal in mind. If there’s a will, there’s a way.

Finally, it’s important to maintain autonomy, but don’t fall into the trap of isolating yourself within the organization. Always keep your stakeholders engaged and aligned while preserving the flexibility and autonomy to deliver and move fast on shared goals.

Sonia Wedrychowicz: What is the future of the digital factory for Alinma Bank?

Sami Al-Rowaithey: I’d be lying if I said I know what the future holds, but I believe in our road map. We have a pipeline of initiatives and propositions for specific customer segments on multiple fronts.

We also want to focus more on propagating the values, practices, and principles of the digital factory throughout the organization.

Finally, we will continue to scale up. When we were moving into the digital factory space a year ago, it seemed very spacious. When you go through the corridors today, there are hardly any spaces left. We've got a lot of engaged people, a lot of movement, a lot of energy, and a lot of passion.

And finally, from a personal perspective, I strongly believe that fostering advanced digital talent and offering solutions enabling individuals to make informed financial decisions can significantly benefit society.

Watch the full interview here.

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