Banks are increasingly adopting automation, cognitive/AI, analytics and blockchain, but too many banks mistake digital projects (mostly in the front-office) for digital transformation
Everest Group reports that 85 percent of banks have digital transformation implementation as a priority for 2018, driven by the need to find efficient ways to address challenges in the industry such as cost pressures, eroding top lines, uncertainty and instability in the geopolitical environment and decreasing customer satisfaction. Unfortunately, in the rush to find digital solutions, many banks are mistaking digital projects for digital transformation.
According to Everest Group, 81 percent of banks are implementing digital projects focused primarily on their front-offices; only the remaining 19 percent are actually going for true transformation by optimizing and integrating their front-, middle- and back-office operations.
“Those 81 percent of banks who have only invested in front-end application of digital technology are engaging in what we call ‘digital washing’—claiming transformation achievements when they are in fact far, far away from true transformation,” said Manu Aggarwal, practice director at Everest Group. “True digital transformation requires connecting the dots between the front-, middle-, and back-office processes to achieve key business objectives. Moreover, it is not an isolated implementation of technology. Rather, it’s an ongoing process where changes in technology and alignment to goals need to be continuously checked.”
In examining the digital transformation strategies within the banking industry, Everest Group identified the following trends:
- Strengthening competitive position, building market share, acquiring and retaining customers, and generating cost savings are some of the major factors for adopting digital technologies.
- Market facing front-office processes lead the demand for adoption of digital services, mainly targeting customer experience.
- Some of the key levers of digital adoption include Automation, cognitive computing and artificial intelligence (AI), analytics, and blockchain.
- While the adoption for automation, AI and analytics is primarily driven by lending, retail banking, and cards and payments, most activity in blockchain is happening on the commercial banking side.
These results and other findings are explored in Everest Group’s recently published report: Banking BPO Annual Report 2018: Digital Transformation or Digital Washing: Looking Beyond the Hype. The report addresses digital washing and the key considerations for successful digital transformation. It also examines the levers of digital adoption within the banking industry, with an emphasis on automation, AI, analytics and blockchain.
***Download a complimentary 11-page abstract of the report*** (Registration required.)