Accelerating the Digital Transformation in Bank XYZ

: In current fast-paced and highly competitive business climate, organizations progressively recognize the necessity of embracing digital transformation. Due to developments in technology and the unprecedented effects of the COVID-19 pandemic, the banking sector is one of the sectors that has experienced significant disruptions. Digital transformation has become increasingly crucial for banks to remain competitive, sustain business continuity, and meet shifting customer demands. However, the mere adoption of digital technologies is insufficient. In order to adapt with the digital era, it is essential to assess the effectiveness of digital transformation initiatives. As Bank XYZ started and continued to undergo their digital transformation, the company has measured its digital maturity the prior year and the result leaned toward the "Digital Master" stage. However, there could be indications that the digital transformation has not been implemented optimally. Using the Digital Mastery and the Digital Transformation Compass framework, the research emphasizes the importance of accelerating digital transformation for Bank XYZ through digital maturity and digital transformation evaluation to analyse its digital transformation progress while recognizing areas for improvement. The result shows that the current digital maturity result display the same trend as the year prior that the company has reached the “Digital Master” stage affected by the current composition of senior executives and the availability of strategic agenda that drives the digital transformation within the company. However, when the digital transformation was analysed further, the transformation progress is still in the moderate level. It can be concluded that that while initiatives have been implemented, there are improvements need to be made with the aim of advancing Bank XYZ’s digital transformation process. This research proposes business solutions that focuses on enhancing synergies withing the organization to accelerate the digital transformation.


INTRODUCTION
The banking sector has been greatly influenced by technological advancements and disruptions brought about by Industry 4.0. Adoption of World Wide Web and the rise in supporting technologies led to the emergence of e-commerce, altered the competitive landscape, and shifted consumer behavior as the result of the digital revolution 1 . This necessitated the need for digital transformation, which emerged as a result of these developments brought about changes in the expectations of customers and business models in banking industry, placing a stronger emphasis on the efficiency of banking transactions. Furthermore, the COVID-19 pandemic has resulted in a shift towards a virtual economy, causing changes in people's attitudes and behaviors as there has been a significant increase in digital banking transactions, with a 29.47% increase in Q3 2022, and it is projected to rise by 30.19% (year-on-year) to reach Rp. 53.144 trillion by the end of the year 2 . With the emergence of fintech, it is crucial for banks to determine what kind of role they want to have in the digital ecosystem. Despite the significant public interest in Sharia-based financial services, the contribution that the sector makes to the country's economic development is only 7%, which is less than conventional banks 3 . Therefore, regulator prepared regulations and policy design for Sharia Banks such as the Indonesia Islamic Banking Development Roadmap 2021-2024 4 . The third pillar of the roadmap focuses on strengthening Sharia banking identity, where accelerating Islamic banking digitalization is considered an important component in enhancing the resilient and competitive in Islamic banking industry. Digital transformation introduces new strategic decisions for managers, digitalizes value creation and extraction, modifies governance mechanisms, and replenishes competencies and culture of an organization 5 . As one of the players in the Sharia banking industry, Bank XYZ has initiated and is still undergoing their digital transformation through pursuing a blends of traditional banking products with advanced digital capabilities, all supported by digital business processes. This is because, despite the rising popularity of digital banking in Indonesia, approximately 80% of respondents indicated that convenient branch and ATM locations influenced their decision for a bank 6 . Incorporating branch access as part of a multichannel approach can assist in solving customers' concern around security and difficulties in understanding increasingly complicated offering. The company has completed and migrated towards Digital Core Banking System, established a Digital Business division, and developed its IT Strategic Plan and Corporate Plan for the next five years with the strategic theme of "Digital Collaborations for Growth." However, one of the constraint Bank XYZ faced during the year were technology acceleration. Considering technology acceleration can quicken their digital presence and technology utilization within the company, Bank XYZ needs to assess its current level of digital transformation progress. By doing so, the organization could better understand its status on the digital transformation journey and identify the components that must be enhanced to accelerate their digital transformation.

BUSINESS ISSUE
This research is driven due to the challenge faced by the company regarding technology acceleration. However, the company also acknowledged that digital transformation presents potential solution to overcome obstacles faced during the year. Along with that, as shifting the business to digital is no longer an option but a necessity to survive, one of the senior executives mentioned that evaluating digital transformation occurring in the company can outline the areas of strength and areas that need improvement. The previous year, Bank XYZ has already assessed their digital maturity level. It can be assumed by the result that the organizations believed that the company has reach the Digital Masters level. This means that the company can combine digital activity with strong leadership to turn technology into transformation, which leads to them being able to outperform their competitors 7 . Even with the result that indicated the company might have reached a high digital maturity, several instances show the reality does not reflect the assessment result. While many companies claim that they have a digital strategy, only a small number consider themselves to believe they possess the adequate resources and skills to succeed in the digital world 8 . The data breach incident that impacted an incumbent and affect the trust of its customers, employees, and other stakeholders shows that digital transformation must be carefully organized, implemented, and monitored to prepare for the unexpected impact of the transformation. Therefore, performing evaluation during various phases of digital transformation is crucial with the aim to understand the company's digital maturity, examine the effectiveness of the process and sensitize stakeholders the need for a collaborative and agile approach 9 . This research study is aimed to gain understanding of Bank XYZ's current digital maturity level, evaluate the digital transformation progress, and identify areas of improvements to accelerate the digital transformation moving forward.

LITERATURE REVIEW
Digital transformation revolves around altering the organization to take use of the technologies' possibilities and restructuring the company to capitalize on strategic assets 10 . It leads the organizations to more profitable revenue, greater competitive advantage, and higher efficiency 11 . The success of digital transformation depends on various factors such as the availability of human resources, the effective implementation of digitalization strategies, and the utilization of technology that provide value to the organization 12 . Various phases have been recognized that are essential to the digital transformation process include evaluating different stage of transformation, defining strategic orientation, setting the digital objectives, and implementing the digital transformation 9 . The Digital Mastery framework reflects the digital mastery of organizations through a 2x2 matrix. This framework is relatively simple to implement and provides immediate feedback and straightforward conclusions regarding the current maturity level of an organization. Due to its ease of access as well as substantial evidence to back up with, the Digital Mastery framework will be utilized in this study. Two dimensions are used to analyze an organization. The first dimension is Digital Capabilities, which emphasizes the consumer experience, operational procedure, and business process 7 . A compelling customer experience generates companycustomer values of customer loyalty. While digitally optimized procedures generate a competitive advantage due to improved efficiency and agility. The emergence of digital technologies has enabled the exploration of fresh prospects which redefine business model. The second dimension is Leadership Capabilities, which consist of managerial characteristics such as digital vision, engagement, and governance 7 . Digital transformation requires an inspiring digital vision, and engagement related to the capabilities to incorporate employees to accomplish this vision. Governance is what coordinates the diverse digital transformation effort in the correct direction. The nonlinear nature of digital transformation might require organizations to enhance their capabilities in many parts as well as occasionally alter from one to another. The Digital Transformation Compass was developed with the objective of helping organizations navigate the complexities of this transformation journey to digital maturity 7 . The framework was developed by the best practices and expertise of recognized "Digital Masters" companies. Digital Transformation Compass consists of four phases with three steps in each of those phases 7 . The initial phase is "Framing Digital Challenge" that involves establishing leaders' understanding of digital potential, hazards, and opportunities that resulted in acknowledgement of the need for change, setting the foundation for digital transformation based on strategic assets and digital competencies, as well as designing a vision and rallying the top executives around it. The second phase of "Focusing Investment" outlines how digital transformation must be financed and supported by appropriate resources and governance. The third phase of "Mobilizing the Organization" involves organizational and cultural change that is established through engagement by transferring the significance and positive effects of digitalization to employees, developing momentum with employees, and instilling new behaviors on all employees at every level. The final phase of "Sustaining the Transition" focuses on how an organization preserves the digital transition and maintains the Digital Mastery level.

METHODOLOGY
The research applies descriptive research which is an investigation of facts aimed at defining the existing condition of events 13 . Both qualitative and quantitative approaches will be incorporated to collect data and examine Bank XYZ's current digital transformation progress. Close-ended questionnaires will be utilized as the quantitative form for this research, which is a data collection approach that consists of an assortment of predetermined questions that are given in a particular order on a form or set of forms 13 . The digital maturity questionnaires will be adapted from the Digital Mastery self-assessment framework consist of 10 questions for measuring digital capabilities and 10 questions for measuring leadership capabilities that was developed by Westermann et. al. (2014) 7 . Similarly, the digital transformation evaluation will follow the Digital Transformation Compass framework that consist of 52 questions. In order to gain more insights from the questionnaire results based on the real conditions of the digital transformation occurring in Bank XYZ, semi-structured interview will be conducted with representatives from different business units to collect information of participants' conduct on current occurrence by using prior queries of what information needs to be gain 14

RESULT AND DISCUSSION
The questionnaires were distributed and was made accessible for two weeks to Bank XYZ's employees who worked at the head office, as well as those who worked at the branch offices that are located across. This research successfully managed to acquire 519 participants for further analysis. The result of the Digital Mastery questionnaires shows that respondents viewed the organization to have reached their Digital Masters level are 92% out of the 519 respondents. There are 4% of those respondents that rates the company is still in their "Beginners" phase, 2% believe the company is in their "Fashionistas" phase, and there are 3% believe they are in "Conservatives" phase. The trend of the data spread is consistent with the Digital Maturity assessment from the year prior. This may be interpreted as an indication that the company's digital-related initiatives have been successful in maintaining the organization's maturity level from the previous year.
To comprehend more about the digital transformation occurring at Bank XYZ, the results of the Digital Transformation Compass questionnaire will highlight how employees perceive the achievement of each digital transformation component. According to the results, which are shown in the table below, many respondents consider the development that Bank XYZ is making toward its digital transformation to be at the moderate level at current time. This indicates that digital initiatives have been established, but there is room for improvement to further advance the organization's digital transformation progress. The moderate condition varies fro m one component to the next in terms of the classification of what should be enhanced. The digital transformation compass result and classification will be outlined in the following table. It can be concluded that the company understands where and how to invest in their digital assets to empower employees while enhancing internal procedures in order to get more engaged with their customers 7 . Regardless of this, there are discrepancies in findings when analyzing the digital transformation development, indicating that all components in the Digital Transformation Compass are yet to achieve their maximum potential. The distinction between digital maturity and digital transformation progress could additionally be impacted by employees' varying perceptions of the digital transformation occurring within the organization.
In accordance with prior research study 15 , there are always disparities between an organization's and an individual's level of digital mastery resulted by lack of digital transformation socialization or engagement with digital advanced employees. Based on the interviews conducted with spokesperson from several business units to clarify the questionnaire results, what might contribute to perception among respondents that their companies have achieved digital maturity is the current compositions of senior executive. They have taken notes and learned from past experiences which leads them to become more daring in pushing the digital transformation forward. As transformation in the company is still on-going, these leaders continuously reviewed the right form of digitalization that suits the company and encourage business units, especially the ones that are directly involved with digitalization, to sit together in coming up with agenda to support company's goals. The leadership shown by top executives as well as strategic programs and initiatives aim towards digitalization that help drives company's plan to be more executable compared to the year prior. Along with that, the company has prepared for the infrastructure and the personnels needed for the digital transformation. This may contribute to a perception among respondents that their companies have achieved digital maturity. Even with the directions and encourage from senior executives, along with resources prepared for the transformation, there are many factors affecting the insufficient execution of digital transformation. Externally, there are requirements to be fulfilled from regulators as one of the factors that delay several products to be launch in the market. Internally, business units have different appetite in grasping the direction towards digital. One of the factors could be due to the middle management that consist of different generations which could affect their relationship with technologies and how they embrace change. This affect how the company experienced the digital transformation; even when awareness has been established, the interviewees believed the questionnaire respondents have different perspectives that can be influenced by demographic conditions, their encounter with digital in their daily work, and how leaders in each business units leads the digitalization. As strategic plans have focuses towards digital transformation, the organization is compelled to follow suit to support the achievement of the company's goals. Yet, the company has not yet truly experienced digital transformation. The most tangible phase of this transformational effort is implementation, as change will be perceived by stakeholders and the speed at which stakeholders implement this change is dependent on their willingness to embrace digitalization 9 . It is possible to draw the conclusion that it is vital to speed up the process for the organization to have the ability able to adopt products and internal applications that are still in the stage of development or that are waiting for the go-ahead signal, and so that the organization can reap the full benefits of digitalization. The genuine benefits of transformation are achieved by identifying potential synergies across divisions and then setting the conditions that allow everyone to take advantage of that value 7 . On the other hand, one of the challenges businesses faced during digital transformation are coordination issues 10 . Several units are capable in improving their own practices, but are not able to influence others. Even when great efforts were made to push digital transformation forward by the senior executives, it will still be difficult to pursue when synergies between business units are not established well. Another point made that, the focus should be on the middle management as they are the leaders that drive business units that also act as a bridge between employees and top executives. The challenge is how these business units' leaders translate the directions towards digital into executable actions and lead their units in the digital transformation. These business units are the ones that can take action to make the vision come to fruition, which requires subordinates to be directed effectively during the change 7 . Along with that, as awareness has been incorporated, conditions continue to evolve which requires this awareness will need to be enriched. It should not just be focused on digital awareness but also towards innovation awareness to promote continuous improvement in the organization. A workforce who feels empowered and strongly believes in a shared vision may still proceed in multiple directions. Hence why engagement becomes essential in the digital transformation by exploring with creative forms of communication and collaboration that promote mutual interaction in all level of the organization 7 .
The study proposed that Bank XYZ should prioritize their efforts on three components based on the Digital Transformation Compass. The company could enhance the way they signal their ambition towards digital transformation by exploring different ways to build better collaborate and enhance dialogue between top executives and employees 7 . One of the initiatives conduct town hall meetings event and establish enterprise social network. A successful project is supported by an increase of collaboration that was affected a degree of trust between the project owners 16 . Along with that, an effective communication is essential in embracing trust and collaboration for a successful project 17 . To establish new behavior and evolve culture of better synergies between business units, the company could implement project management tools to boost project development efficiency. Lastly, it is essential to build the foundation skills of the middle management through Executive Leadership Program. The aim is to strengthen their capabilities in executive strategic directives from senior executive, as well as in leading the digital transformation and become better role model for the subordinates within their business unit. Leaders who are set up for future challenges must be people-centered, technologically proficient, and empowering, with attitudes of continuous development, value interpersonal connections, and lead in a collaborative, trustworthy, encouraging approach with empathy, humility, compassion, integrity, and creativity 18 .

CONCLUSION
The emergence of digital transformation represents a challenge that the industry needs to go through for businesses to continue existing in the modern world. Bank XYZ has started the process of digitally transforming their business operations, which they are currently still going through. One of the senior executives observed that evaluating the digital transformation that is taking place may offer an indication of how effectively the progress is being made. It is possible to identify both areas of strength along with areas of weakness requiring improvement to prevent unanticipated outcomes arising from the transformation. Therefore, the objective of this study is to evaluate the digital transformation initiatives that have already been put in motion within Bank XYZ to gain an understanding of the company's position in their transformation journey. The result shows that the company has reached "Digital Masters" in their digital maturity, which have the same trend as the previous digital maturity result. The awareness of strategic plans and initiatives towards company's digital transformation, as well as current arrangement of top leadership that are bolder in pushing the digitalization forward that can be assumed builds the judgement of a high digital maturity within the company. Yet, using the Digital Transformation Compass framework to explore further into the digital transformation progress, the results are leaning towards moderate level for all the components. Several products and internal applications are undergoing development or awaiting approval from regulators, as digital transformation is still an ongoing process. Based on interviews conducted, different levels of understanding and desire for digital implementation exist among respondents, which can be affected by demographic characteristics, their exposure to digital in their daily work, and middle management leadership that drives each business unit in executing the digital transformation. It can be concluded from the data gathered that while the respondents perceive the company has prepared resources for their digital transformation, the execution of the transformation requires improvements to be made. Therefore, in order to accelerate digital transformation, the company must focus on building synergies between business units in order to push the development of these products.
The study proposed business solutions to drive better collaboration and communication between business units to accelerate the digital transformation of Bank XYZ. It focuses on improving the way the organization's signal their digital transformation ambition through exploring new ways of communication to enhance two-way dialogues between top executives and employees. Along with that, implementing digital tools to manage projects around digital transformation and established the foundation skills specifically to enhance the capabilities of middle management in leading their business units in achieving the company's vision.