How to exploit digital transformation in banking

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A new report by SAP and IDC, released this week, looks at ‘The Future-proof Digital Bank’.

The report, based on results and analysis from their 2016 Worldwide Banking Survey on Digital Transformation, is essential reading for any financial services marketer.

The survey was carried out in Q2 2016 and had 503 respondents from 265 banks worldwide. It aimed to understand:

  • The maturity of digital transformation (‘DX’) in banking
  • Where institutions are focusing their efforts
  • How banks are measuring their initiatives
  • And what business models are driving the need to transform

What's the picture in banking today?

Although – as the report says – the majority of EMEA banks claim to be involved in some sort of innovation, the survey shows a more piecemeal picture, with many ‘islands of innovation’, but true transformation strategies are far rarer.

What areas are banks focusing on?

  • Automated security strategies are the most commonly-seen examples of transformation, with 43% of banks either already delivering or having completed projects here.
  • For a fifth of firms, DX initiatives are limited to the back-office…
  • …Although 24% believe that DX is an ‘organizationwide strategy’.
  • One of the main benefits and objectives of technology is its ability to personalise and tailor customer experience.

The report’s authors believe that digitising both back (operations) and front (customer-facing) office is essential for a joined-up and ultimately successful approach. 

So far, most projects have focused on front-office functions – mobile communications, for example. 44% of retail banks surveyed have either deployed, or plan to, projects looking at this. Future projects are more likely to look at how back- and middle-office functions can be digitised.

The report makes it clear that an ‘enterprisewide’ approach will enable firms to better adapt to change. The report expects that ‘business models will change and adapt, and the technology infrastructure needs to enable this.’

Where is the drive for DX coming from?

To date, the finance department has led the way in pushing innovation, particularly where banks are either commercial or retail. 

In banks that are a mixture of commercial and retail, Marketing is far more central to DX. The report believes that this is because ‘the mix of demands results in a mixed approach with less defined overall responsibilities for each line of business or IT. Marketing, with an organisation-wide remit, is able to have a wider view of customer needs and strategic development and is better placed to push DX direction.’

What does this mean for financial services marketers?

Any financial institution that isn’t looking at transformation, and exploring or adopting new delivery methods, will be left behind.

As a marketer, this should concern you.

Some of the ways banks can exploit the opportunities available are detailed in the report:

  • Instead of fearing change, banks should move towards new solutions as a way to improve efficiency and customer value and protect market share.
  • Incumbents could explore collaboration with FinTechs – viewing them as a potential partner rather than a threat.

These suggestions strongly mirror advice given in a speech by the FCA last week, where the regulator encouraged embracing, rather than fearing, innovation and disruptive banking start-ups.

What next? Your action plan for success

The report finishes with three good pieces of advice for any firm wanting to exploit the opportunities presented by DX:

Build board-level involvement. C-Suite support for your plans is key – read our tips on building the business case for marketing automation for more on this.

  1. Build a leadership structure for organisation-wide transformation – make sure your structure supports your aims.
  2. Build an infrastructure that supports partnerships – back to the ‘fintech as potential partner, not enemy’ approach.

Digital transformation in banking isn’t going away – and it’s not going to slow down.

Quite the opposite.

Get your firm on the front foot and you can ensure you’re one of the forerunners in the ongoing revolution.

The report cites mobile access as one area where firms have focused their initiatives. If you want to ensure you’re adopting the latest mobile-friendly strategies – but meeting your Compliance obligations at the same time – you can read our tips on the 10 ways to make your website mobile-friendly.

Download your free copy of the 10 tips here.

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