According to the survey, most common goal for traditional banks is cutting costs, with very few realizing the growth opportunities that digital offers
Frankfurt/Munich, December 3, 2015 – The digital revolution is underway for European banks according to a new survey, “Digitalization in Banks,” by the BearingPoint Institute and the Bavarian Finance Center (BFZ). The results of the survey of 48 European banks show that all banks are pursuing digital solutions for departments, processes and customer services. The most common goal for traditional banks is cutting costs, with very few realizing the growth opportunities that digital offers.
With tougher regulations and competition from new market entrants (e.g., ‘fintechs’, Apple, Google) banks are spending billions of euros on digitalizing back-office functions and expanding customer services. The survey offers guidance for the development of a target-oriented digitalization strategy that cuts costs, improves revenues and attracts and retains customers.
The results of the survey are clear: traditional banks must change the way they think about their business and need to significantly invest in new digital technology. Fintechs, telecommunication providers and payment services from technology giants started the revolution, and established banks realize they’ll miss the future if they don’t take advantage of all the digital tools available to them, such as the troves of customer data they have.
Dr. Felix Breuer, Managing Director BFZ
It is evident from the survey that banks know they must act, though few have followed through. As an example, only 17% of banks say they have achieved a high degree of digitalization for their retail business, yet 91% say retail banking is the most important area to leverage digital technology. Many cite a lack of management awareness and risk aversion to innovation as barriers to action, and this is seen by the fact that the vast majority (95%) of the European banks surveyed say being the first to introduce innovative digital technology provides “first mover advantage,” but the majority of banks describe themselves as “second movers.”
Banks need management that understands the advantages of digitalization and has a broad and holistic view of how to deploy technologies throughout the organization. Banks need to see digitalization as an opportunity for growth and to improve services, rather than only as a way of cutting costs.
Dr. Robert Bosch, Partner at BearingPoint
The survey is a thorough assessment of the current state of digital in the European banking system with a look to what the future holds. It answers seven questions, from why banks are investing in digital technologies to what the future holds for digital banking, and ends with advices for bringing digitalization to banks.
Some of the takeaways from the survey:
The data came from the analysis of 48 responses from banks. The respondents consisted of managers in European financial institutions: 37% of them are based in Germany, 19% in Switzerland, 15% in France, 2% in Austria, 2% in Liechtenstein and 2% in Spain (23% of the respondents did not state their country of origin). Broken down by type, 27% are major commercial banks, 23% private banks, branch of foreign bank or other, 23% regional banks, 15% direct banks, 6% saving banks, central institution, 6% cooperative banks, central institution, 4% capital investment companies, 4% mortgage banks and 4% banks with special function.
Please read the full survey online on: http://inst.be/005DIB
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