Disrupting the disruption
Banks are undergoing a paradigm shift in the way customers expect them to do business. The rise of new alternative financial providers based on fintech platforms has forced banks to accelerate their own adoptions of digital tech. KPMG’s 2017 U.S. banking CEO Outlook study shows most banking leaders are now aware of the need for change, with 80 percent intending to invest in digital infrastructure over the next three years.
The technological disruption of the financial services market is altering the way in which banks do business. The survey found most banks are viewing the disruptions positively, approaching digital transformation as an opportunity to introduce forward-thinking strategies. 53 percent of CEOs said the disruption shouldn’t be viewed as a threat and 56 percent said their own organisation is actively disrupting the sector they operate in.
Following the customers
Banks are taking individual approaches to digital transformation. A set of common themes lies beneath each effort, with an improved customer experience, heightened sensory capabilities and more agile innovative processes the top benefits sought by CEOs.
On the technological side, banks are increasingly offering mobile payments solutions and personalised banking options in response to direct demand from consumers and retailers. KPMG said mobility is now a standard customer expectation of financial providers.
READ NEXT: Bank of America embarks on cloud-first digital transformation
“In order to keep pace with the expectations of today’s connected consumers, banking leaders realize the need to digitize the entire enterprise – from the back office to the front door,” said Brian Stephens, National Leader of Banking and Financial Services at KPMG. “They are up against some stiff competition from the fintech startups and retailers, and need to be able to offer their customers a much more personalized and mobile experience.”
Implementation issues
As in all industries, bank leaders are facing digital implementation difficulties. CEOs pushing towards digital-first business processes are reporting the same issues that organisations in other sectors have already encountered.
The requirements of maintaining legacy systems, wrestling with the complexity of new technologies and hiring skilled cloud and AI experts can hold back a firm’s digital strategy. 44 percent of CEOs said their organisation “is not ready” to start using AI, even though it’s integral to most customer experience improvement programs.
Looking ahead
Banking’s one of the industries that stands to benefit the most from digital transformation. Its current reliance on outdated, time-consuming processes is frustrating consumers and restraining retailers. The enthusiasm from CEOs is an encouraging sign that digital-first change is now welcomed in the sector.
However, the resurfacing of now typical implementation issues suggests tech providers could do more to help banks along the road. Until a stable digital foundation is formed, banks will be unable to fully utilise the benefits of AI and the cloud. This will leave them vulnerable to rising fintech providers and could create tensions within the organisation.
