According to the recently published report from Accenture, only 12% of banks globally are fully committed to digital transformation. The US$1 trillion that traditional retail and commercial banks have invested globally over the past three years to transform their IT operations has not yet delivered the anticipated revenue growth as per the report.
The report was analysed after data collected from more than 160 of the largest retail and commercial banks in 21 countries to determine whether those making the most progress on technology were achieving better financial performance.
- 50% of banks achieving higher profitability and returns on equity, driven by greater operating leverage, but they’re not achieving differential revenue growth
- 12% of banks appear to be fully committed to digital transformation and investing in a digital-first strategy; the other 38% are in the midst of transformation, but their digital strategies lack overall coherence.
- The remaining half (50%) have not made much visible progress in digital transformation at all and investors are showing a lack of confidence in their future prospects.
The research analysed where banks are on the digital maturity scale by looking at several factors: public communication to the market about their digital journey through earnings call transcripts, news releases and stated investment budgets; recognition of digital leadership by third-party industry analysts and observers; and Accenture’s subjective analysis based on its deep financial services experience.
The research identified the following three segments of digital maturity:
Digital Focused: Only about one in eight global banks (12%) appear to be fully committed to digital transformation and are investing toward becoming digital-first banks. This is the only group with a price-to-book ratio above 1x.
Digital Active: Approximately four in 10 banks (38%) are in the transformation phase but have not communicated a cohesive and compelling digital transformation strategy to the market. Digital efforts are resulting in higher return on equity, with the expectation of more to come.
The Rest: The remaining 50% of banks have not made significant advancements in digital transformation. To improve their competitiveness, they should align and commit their strategies to digital transformation.
Julian Skan a senior managing director and global Banking lead in Accenture Strategy. “Our research shows that digital leadership drives superior economic performance, and that the gap between ‘the best’ and ‘the rest’ is widening at a pace that should concern banks struggling with digital transformation and overall competitiveness.”
“Banks had hoped that by creating better digital products and experiences for customers they would have achieved the same fast user and revenue growth as new tech-savvy competitors or large technology firms, Alan McIntyre, a senior managing director at Accenture and head of its global banking practice ” said.
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