January 23, 2018
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:
- 22 percent higher adoption of online banking platforms
- 13 percent higher adoption of mobile banking platforms
- 20 percent higher mobile banking application rankings
- 3 percent higher growth in deposits
- 9 percent lower efficiency ratio
“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:
- Secure: consumers demand transparency in fees, products and personal financials and expect high levels of security without significant friction in the customer experience.
- Ubiquitous: consumers demand access to banking services anytime, anywhere and from any device. They expect high digital channel availability from their banks.
- Personal: consumers demand that their banks not only understand their current needs but also detect potential needs and offer relevant, customized solutions
- Easy: consumers demand a seamless user experience across channels and types of transactions. They expect integrated financial solutions (e.g., payment processing) with their activities.
- Responsive: consumers expect quick responses to their queries across the channels of their choosing. They expect context-aware responses in real time.
“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.