Digital banking transformation: More action less talk needed

Digital banking transformation: More action less talk needed

Are banks just paying lip service to digital transformation? That's the question asked by Accenture in a new study which analyses the strategies of 53 banks across Europe.

According to the study, 86% of institutions include digital as part of their strategy, and 63% have established a “chief digital officer” — but only 37% have allocated budget specifically for digital transformation.

Accenture’s “European Financial Services Digital Readiness Report” found that - on a scale of one (basic level) to four (best practice) - major banks and insurers across UK, Italy, Germany, Spain and France scored an average of 3.15 for recognising the importance of digital as part of their strategy and only 2.10 for their progress in actually using digital solutions to streamline activities.

“Digital is universally embraced by financial institutions in Europe but inconsistently executed,” says Sushil Saluja, senior managing director of Accenture’s Financial Services group in Europe, Africa and Latin America. “This report, which provides a benchmark for digital readiness, tells a story of an industry that recognises the importance of digital as an instrument of change, but that has yet to find its footing for the level of transformation it needs to execute.”

According to the report, institutions that achieved a higher score in the analysis tended to have lower cost-income ratios, generate higher returns on equity and maintain higher average share prices.

Says Saluja: “No one country can boast being a digital leader in Europe. When viewed through a geographic lens, the research results indicate varying levels of digital maturity among banks and insurers within each of the five European countries included in the study.”

While UK firms talk the language of innovation, they underperform in the execution of digital strategies, the design of new products and services and digitalising their internal processes. Italian, Spanish and French banks fare better in customer-facing execution, while German banks are seen as clear laggards in embracing digital technologies.

Massimo Proverbio, senior manager director of Accenture’s banking practice in Europe, Africa and Latin America comments: “Top European financial services firms see digital as a key component of their growth strategies, and, in many cases have devised a partial plan on how to integrate digital activities into their businesses. But this often translates into a number of dispersed initiatives instead of a structured and holistic action plan to capture value from the digital market.”

Comments: (5)

Douglas Hartung
Douglas Hartung - Diebold - Houston 05 May, 2016, 20:47Be the first to give this comment the thumbs up 0 likes

Sounds about right.  Building software (with allocated resources) is a bit harder than building strategy presentations in PowerPoint. But progress is being made.

 

A Finextra member
A Finextra member 06 May, 2016, 08:41Be the first to give this comment the thumbs up 0 likes

Yes, digital strategy brings new business opportunities and improved decisions. Also, digital transformation is one of the new emerging technology embraced by banking organizations across the globe.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 06 May, 2016, 13:39Be the first to give this comment the thumbs up 0 likes

Digital transformation is largely driven by the need to enhance customer experience. It's but natural that progress on digital transformation will be steered by a region's commitment to CX. If Sushil S / Accenture were to repeat the same study in Asia Pacific or USA, I'm quite sure that the results will be quite different from what they found in Europe.

Vivek Khandade
Vivek Khandade - A - Pune 15 May, 2016, 17:551 like 1 like

Digital Transformation is not just about technolgies it is also about operation system and process. In short it is more as reform of the banking and on going activity. So as said in report serious attention by CXO needed.

Roopa Kamath
Roopa Kamath - Vasista enterprise solutions - Bangalore 15 May, 2016, 19:19Be the first to give this comment the thumbs up 0 likes

Well said. Indeed more action and commitment is required on a consistent basis. It's a long journey and it's not a single department in an banking organisation that owns the transformation onus. It lies with all the department's and it's processess. 

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