Digital transformation is growing more pervasive in every banking organization, moving beyond “projects” to organization-wide initiatives involving technology, product development, business models and culture. Budgets are increasing as organizations are finally updating legacy systems and ownership of the process is moving up the organization structure.
While the potential benefits of digital technologies are well documented and accepted by a majority of bank and credit union leaders, the deployment of digital banking transformation does not appear to be keeping pace, according to the Digital Banking Report, “State of Digital Banking Transformation.” This is concerning, given that the pervasiveness of required digital transformation is moving beyond the IT area of banking to include virtually all areas of the organization.
Highlights of this report, sponsored by Pega:
- Digital banking maturity is very low in retail banking, with only 12% of firms indicating that they are “leaders.”
- There is a very strong correlation between innovation leadership and digital transformation leadership in retail banking.
- The current focus on retail banking transformation is in the infancy stage (1-3 years), with most efforts revolving around delivery channels.
- Less than 50% of organizations believe they are prepared for competitive threats, customer expectations or technology advancements.
- The most successful digital transformation efforts are led by a CEO (37%) or the Chief Digital Officer (17%) and have a formal team with a broad cross-departmental scope.
- Most organizations have not integrated advanced technologies (design thinking, AI, robotics or IoT) into their digital transformation process.
- The biggest challenges to digital transformation in banking is limited budget, legacy culture, talent availability and IT infrastructure.
There are also strong indications that leadership lacks experience in implementing such massive transformations. This has resulted in a prioritization of technology being purchased that may only scratch the surface of needed transformation. Finally, it also appears that the current financial strength of the industry is resulting in complacency around making large, overarching changes to what has long been the operating norm in banking.
Digital Transformation Still Lacks Maturity
Digital Banking Report research indicates the proportion of financial institutions that consider themselves digital transformation leaders is very modest (12%). And, while the term “fast follower”could undermine the concept of “digital transformation leader,” only an additional 34% of financial organizations place themselves in this category. This places more than half (55%) of organizations…