57% of consumers prefer online banking in the age of Covid-19

0

According to the World Retail Banking Report 2020 (WRBR) released today by Capgemini and Efma, retail banks are under pressure to transform as new entrants focused on customer experience gain popularity in the market.

As the pandemic environment drives consumers to interact more digitally with their banks, platform models offer agility and scalability in times of uncertainty. The report found that platform-based banks find it up to twice as easy to increase operating profits, unlock new sources of value and improve operational efficiency.

The report reveals that the global financial industry is in the midst of a historic transformation as nimble, digital-native non-traditional players continue to champion customer experience and redefine long-standing principles to gain significant market traction. . With more than half (57%) of consumers now preferring internet banking, up from 49% pre-COVID-19, and 55% preferring mobile banking apps, up from 47% previously, the stakes have risen further as the context of COVID-19 continues. move consumers towards digital banking.

The report suggests that banks need to move to platform-based models to fuel the growth and innovation needed to stay competitive and that adopting Open X[1] will be critical to long-term success. As COVID-19 has accelerated the urgency of digital transformation, banks may need to take a more pragmatic approach to transformation to continue their journey to Open X during these uncertain times.

“Consumers expect a seamless digital experience from their financial providers because they have grown accustomed to BigTechs[2] in other parts of their lives. Traditional banks are challenged to meet these expectations as new digital native entrants focus on customer experience from day one,” said Anirban Bose, CEO of Capgemini Financial Services and member of the Executive Committee of the group. “Banks that now invest in modernizing their core technology and evolving it to a platform-based experience will simultaneously delight customers and grow profitably.”

“COVID-19 has shone a light on the digital banking experience,” says John Berry, CEO of Efma. “Modernizing legacy systems must be a priority for banks looking to accelerate their growth, as customer expectations continue to rise and those that neglect this risk falling behind.”

The evolution of legacy systems will transform the core
Having prioritized short-term profits over long-term sustainability, some banks have implemented an accumulation of legacy systems. This situation complicates the integration of emerging technologies, which affects customer experience and operational excellence. Yet despite the challenges of the legacy system and the benefits of a modern core, banks are hesitant to take transformational action due to the resource levels required and the risks associated with inefficient implementation.

Bank executives recognize the barriers to moving to a platform model. The report found that 80% of bank executives cite cybersecurity and privacy issues, outdated data management (68%) and identifying the right partners (73%) as top barriers to moving to a platform system. -form.

Partnership and Open X are key ingredients for transformation
Capgemini’s report describes how banks can overcome their challenges and approach core business transformation through strategic, integrated and collaborative orchestration. Research[3] shows that incremental modernization is the preferred evolution method (54%) among bank executives, allowing banks to upgrade the most critical functions and gradually transform legacy systems.

Partnership is also an obvious accelerator of the banks’ success. Two-thirds (66%) of bank executives say it takes 1-2 years to innovate and launch a new concept when working alone; 58% said it takes less than a year to launch a product in collaboration with FinTechs/BigTech partners. However, regulatory and compliance issues (72%) and poor IT compatibility (72%) are identified as barriers to effective collaboration. The Open X model works by helping banks reduce their operational costs and move from a high fixed investment in IT development to a more profitable and flexible cost model that integrates specialized players in the ecosystem.

Platform models diversify revenue streams and create a new digital ecosystem
Banks that adopt the platform models can expand their market reach, improve operational efficiency, increase business profitability, and offer differentiated and personalized products and services from their traditional competitors. By moving to a platform-based model, banks that were experiencing incremental customer growth can create new business models to monetize some of their strengths.

The report outlines three main options for moving to a platform-based model: banks can either purchase and integrate a new platform, create their own, or share ready-to-use platforms. Barriers to a platform-based model include security, legacy core banking systems, managing outdated data, inherent culture of risk aversion, identifying the right partners, and budget constraints.

Share.

About Author

Comments are closed.