Just a short five or so years ago, digital capabilities were a competitive differentiator for major service providers. Today, they’re a competitive must. As a result, global and offshore-heritage service providers alike are making significant investments in digital technologies such as blockchain, Artificial Intelligence (AI), Robotic Process Automation (RPA), and Internet of Things (IoT).
While the global players took the lead in building what is now a billion-dollar digital landscape, offshore-heritage service providers such as Infosys, TCS, and Wipro are quickly catching up. And their strategies to build and deliver greater value through digital-driven productivity and IP are clearly paying off. For example, our research found that their digital revenue jumped from 20 percent to 30 percent of their total revenue between Q1 2018 and Q1 2019.
Let’s look at how offshore-heritage service providers are upping their game with digital investments.
One of their strategies is to enhance the customer experience and improve efficiency through internal development of digital-based capabilities. For example:
As their initial reskill/upskill approach left them far behind global service providers’ inorganic approach, offshore-heritage service providers have taken the leap and started acquiring companies to obtain direct access to already-trained talent. For example:
In order to develop skills and knowledge about these next-generation digital technologies in the general workforce, offshore-heritage service providers are partnering with niche start-ups to improve their agility/flexibility, reduce costs, and access stronger and better insights. For example:
With digitalization on the rise across industries and product segments, and a bearish economy outlook in key markets such as the United States and Europe, offshore-heritage service providers will continue to invest heavily in next-gen technologies. This will help them to emerge as strong partners for global organizations to wade through their economic pressures.
To learn more about offshore providers’ digital strategies, key market trends, global locations activity, and service provider activity in Q2 2019, please see our Market Vista™ : Q2 2019 report.
The Indian software outsourcing industry is currently at an interesting crossroads. Later this week, there could actually be a reshuffle in the top slots, something that hasn’t happened in over five years.
This change comes even as these firms continue to grapple with the twin challenges posed by the maturing of digital technologies and increased pressure on margins.
“The large and scaled Indian base providers will continue to experience head winds as digital cannibalizes their legacy business and challenges their profit margins,” said Peter Bendor-Samuel, chief executive at research firm Everest Group.
These ‘retail banks of the future’ will rely on an ‘ambient fabric’ that connects people and businesses to holistically impact the consumer lifecycle
Everest Group has studied 30 leading North American retail banks and identified 11 Pinnacle Enterprises™ that are leading the way with new “experience first” business models, delivering business results through the effective use of digital technologies.
In its recently published report—“Digital Effectiveness in Retail Banking | Pinnacle ModelTM Assessment 2018: Journey of North American Banks to Build SUPER Experiences”— Everest Group examines how these banks employ digital technologies to provide superior customer experiences, establish stronger customer engagement and produce higher business growth. The assessment focuses on multi-channel digital technologies that are used in consumer interactions – both online and offline.
Digital Banking Pinnacle Enterprises™ have a major competitive edge across a breadth of digital functionalities offered and adoption of channels. The following Digital Banking Pinnacle Enterprises stand out for making a strategic impact through their digital transformation efforts: Ally Bank, Bank of America, Capital One, Chase, Citi, PNC,Suntrust, Wells Fargo and USAA from the United States, and CIBC and RBC from Canada.
Collectively, the Digital Banking Pinnacle Enterprises outperform their peers, delivering:
“Over the last three years that we have conducted this assessment, we’ve documented an increasing correlation between banks’ digital capability maturity and business outcomes,” said Jimit Arora, partner at Everest Group. “For example, banks with more mature digital capabilities have superior brand standings; their customers express high degrees of trust and strong perceptions of transparency and accountability. Also, banks with more mature digital capabilities have better efficiency ratios, higher staff productivity and larger deposit growth.”
“Everest Group is establishing indisputable evidence that effective investment in digital technologies and strategies contributes significantly to business success,” adds Michel Janssen, chief research guru at Everest Group. “Our Pinnacle Model assessments show organizations exactly who is succeeding and how. Armed with this clear point of comparison, organizations are better equipped to prioritize where to invest their time and resources and plan their own path to the top.”
Everest Group predicts the retail banking industry soon will witness a sea change as banks move to a co-creation model—joining with allied businesses to combine, package and offer products and services to orchestrate consumers’ full financial lifecycles. Consequently, banks will move away from being perceived as just a physical structure that offers financial services and products to being an “ambient fabric” connecting people and businesses.
Consumer preferences are the impetus for this sea change; banks are compelled to shift to an “experience first” business model to respond to customer demands for a “SUPER” banking experience:
“Traditional banks are being forced to reinvent themselves to compete with FinTechs and other non-traditional providers and to deliver what customers demand,” said Arora. “Digital technologies are at the heart of this transformation. By weaving together digital technologies, experience-first strategies and new alliances across industries, banks ultimately will become the underlying, connective fabric that unites the global ecosystem.”
About the Pinnacle Model
Everest Group’s proprietary Pinnacle Model™ assessments, which include input from executives from leading Fortune 1000 companies, compare internal capabilities to desired business outcomes, such as disrupting the industry, improving customer experiences, increasing market share, and launching innovative products and services. By highlighting what the best—Pinnacle Enterprises™—are doing, these performance studies help organizations plot a journey from their current position to where they want to go, prioritize investments of time and resources for maximum impact, and accelerate change.