European banks & digital strategies: mind the gap
Digital Readiness Framework. Source: Accenture
European financial services companies must close the gap between vision and execution in their digital strategies, and here are the findings to support this statement.
Whilst major European banks and insurance companies appear ready to embrace digital as a solution for maintaining both revenues and relevance, research from Accenture shows they will need to work a lot harder to close the gap between aspiration and application.
Analysis of 54 institutions within the continent’s five largest economies shows that European financial institutions are ready to embrace digital technologies. But they are more effective – by nearly 50% – at envisioning innovations than actually applying them.
While nearly half of Europe’s major banks are working with fintech startups, the research shows that very few have moved on to executing a plan for digital transformation.
No one country, industry or company comes on top as a clear digital leader in Europe. The findings indicate varying levels of digital maturity among banks within each of the countries. In the UK, financial services firms outperform in the planning dimension but have room for improvement in the execution of digital strategies, the design of new products and services and digitalising their internal processes.
Cora Stone, managing director, UK and Ireland, banking at Accenture says: “Digital is universally embraced by financial institutions in Europe but inconsistently executed. Our new index, which provides a benchmark for digital readiness, tells a story of an industry that recognises the importance of digital as an instrument of change, but that has yet to find its footing for the level of transformation it needs to execute.”
“It is surprising how few financial services firms apply analytics solutions to internal processes and customer data, or use cloud solutions to automate internal processes and drive collaboration. Across the board, financial services need to step up their digital game to manage their systems in order to reduce costs, increase efficiency and comply with regulators.”
The majority of financial services firms can point to some digital services, however these remain as dispersed initiatives instead of structured and holistic action plans. For example, most firms include digital as part of their overall corporate strategy, yet only 37% have a dedicated budget for digital transformation. Most have built an online and mobile presence for engaging with clients via social media, but just 39% have C-level executives participating.
Crucially, digital readiness links to higher stock prices. Institutions that achieved a higher score on the index tended to have lower cost-income ratios, generate higher returns on equity and maintain higher average share prices.
In turn, consumers expect big banks and international insurers to meet their financial services needs wherever and whenever those needs occur. New entrants are already building financial transactions seamlessly into rich digital experiences, taking banks out of the loop and out of customers’ sight. For that reason alone, it is time for financial services organisations to stop thinking about digital and start executing.
