Wednesday, April 24, 2024

Banks Overwhelmingly Embarking on the Digital Transformation Journey

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NetFinance’s latest report has some good news for IT vendors and fintech (financial technology) firms that serve the banking sector, particularly those that specialize in helping banks better serve their customers.

The vast majority of banks have at least kicked off their digital transformation initiatives, according to the NetFinance 2016-17 Benchmark Report from Worldwide Business Research (WBR), operators of the NetFinance digital innovation in finance events, and Liferay, a customer experience software maker. Only 1 percent of banks have yet to make the leap, WBR found.

Most banks are either just getting started (37 percent) or are at the halfway point (49 percent) of their digital transformation. Nine percent reported that they close to the finish line while just 4 percent claimed that their digital transformation was complete. The results were gleaned from 70 executives who attended the NetFinance Interactive 2016 conference in April.

“Within the financial and banking industry, the push for digital transformation has come from two main areas: competition from digitally-enabled startups as well as the need for established banking institutions to meet the expectations of their digital-native customers,” John Choi, Director of U.S. Operations at Liferay, told Datamation. “The enterprise IT departments of these digital transformation focused banks are developing strategies and turning to platforms that address ease of use, customer self-service, and seamless in-branch, online and mobile experiences, all while ensuring the security of their customers’ financial data.”

Banks are modernizing their business processes and investing in new technology solutions to create seamless, omnichannel customer experiences (94 percent) and establish full-featured customer lifecycle management (92 percent) platforms. An estimated 75 percent are integrating their customer acquisition and retention channels or have already accomplished this.

As with any major undertaking, challenges arise.

Somewhat unsurprisingly, given the highly-regulated industry banks operate in, compliance (47 percent) was named one of biggest obstacles to digital transformation. Fragmented data sources (44 percent) also ranked high, but the largest stumbling block is the availability of IT resources, or the lack thereof.

A digital transformation project may be a bank’s CIO’s time to shine, suggests the study. “With 56 percent of respondents saying access to IT resources is an obstacle, and 87 percent suggesting technology is intrinsic to the transformation, and must be considered in tandem with strategy, we have to give the CIO a big seat at this table,” stated the report.

Most banks believe that a cross-departmental team (41 percent) or the C-suite (32 percent) should take the lead on their digital strategy. Fourteen percent believe marketing and sales should be in charge, while 11 percent advocate the formation of an entirely new digital department. Just 2 percent of feel that their IT departments should lead the charge, a curious result considering that most executives agree that technology is intrinsic to digital transformation (87 percent), according to the report.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

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