Traditional banks are facing fierce competition from technology companies and fintech startups as their digital transformation and innovation efforts fall short, says a recent report. The Innovation in Retail Banking report found that, despite implementing strategies, less than 20% of banks have succeeded in digitally transforming at scale.
A majority of the 350 banks and financial services companies surveyed said that legacy technology and system integration challenges were their biggest barriers, along with time and cost required to bring concept to reality. Others struggle to transform culture, talent and workforce.
Staying in the innovation race
The 11th joint report by Infosys Finacle and Efma found that organisations where innovation is a priority are further ahead of their peers in the desire to become a ‘digital bank’. Yet more than half of respondents admitted to lagging in innovation, as well as in their thinking on a business model for the future.
Just 26% mentioned evolving from a full stack bank towards platform or open banking models, yet three-quarters of the companies believe that Open Banking will attract new investment.
While the industry is increasing investments in open banking APIs, mobility and advanced analytics, the report also found low levels of readiness in regards to this technology. Half of banks are considering co-innovation with business partners as a key strategy for innovation in the next 12 months.
Jim Marous, owner and CEO of the Digital Banking Report, said: “It is clear from this year’s research that being an innovation leader is requisite for advancing digital transformation in financial services.”
He continued: “Innovation leaders have a strong innovation culture, are investing in advanced technologies, are achieving strong financial results from their investments and are better positioned for the future.”
The full report is available here.