Banks creating 'islands of innovation'
15 June 2016 | 11911 views | 9
Just one-in-four European banks have executed a full-scale digital transformation strategy, with many creating disconnected islands of innovation in customer-facing positions, according to research conducted by IDC.
While 96% of the 250 retail and corporate banks across Emea polled had completed some kind of digital transformation (DX) initiative, room for improvement remains, says IDC, which conducted the research on behalf of SAP.
The findings show digital transformation often occurs only in the front office, creating "islands of innovation" that prevent banks from reaping the benefits of digital transformation at an organisational level.
Forty percent of respondents indicate that digital transformation remains a front-office initiative aimed at improving customer experience, while just on-in-five reported any form of back-end infrastructural investment to support the shift to digital.
One in five banks (21%) surveyed currently have a chief digital officer (CDO). IDC believes that one in two will have a CDO or digital leader driving enterprise-wide digital transformation by 2020.
A recent study by Accenture of 53 banks in Europe appears to support the hypothesis that many financial services incumbents are merely paying lip service to digital transformation. According to that study, 86% of institutions include digital as part of their strategy, but only 37% have allocated budget specifically for digital transformation. Confusingly, Accenture reported that 63% of banks have established a chief digital officer, a finding that is at odds with IDC's data.
Jerry Silva, research director, says: "For digital transformation to become ingrained in a bank's DNA and strategy, there needs to be a champion - and that is the chief digital officer. The role of the CDO is still new and maturing, but it should be focused on aligning different segments of the organisation and different technology processes around one common goal - greater customer engagement and retention."