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Only 24% of banks across the Europe, Middle East and Africa region have end-to-end strategies to engage customers digitally, despite 96% of them completing some form of digital transformation initiative, according to a survey of 250 banks.
The findings from an IDC report commissioned by SAP found that much of the digital transformation happening at banks is in the front office, which limits the benefits.
A total of 44% said digital transformation initiatives were linked to front office only. Some 20% said they were back office only, and 24% said digital transfomation was across the organisation.
Banks are missing out on the opportunity to cut costs, while also improving services, through having digital from the front to the back of the office. This can come about through technology such as automation.
“This is not sustainable. IT must work with lines of business to create an enterprise wide approach, with the end goal being an entirely digital platform. Digitising the bank means that the bank can reduce its cost base and improve customer experience,” said IDC.
To this end, IDC said banks need to employ individuals that can drive digital deep into the business and IT infrastructure.
“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 [CDO],” said Jerry Silva, research director for IDC Financial Insights.
“The role of the CDO is 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.”
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The study found 21% of banks have a CDO, and half expect to have one or a similar position by 2020.
IDC said these individuals need three characteristics: strong executive commitment, which leads to a collaborative culture; a focus on a digital core that includes analytics and open, agile technologies; and a willingness to partner with external providers, such as financial technology startups, technology providers and non-financial services firms.
Dutch bank ING is an example of a bank that has digitised from the back office to the front office through automation of callcentre and IT department activity. The bank said the move cost €200m for two years and it expects to save €270m per year from 2018.