UK banks falling behind in digital transformation efforts research from Accenture.
Despite investing more than $1trn globally in new technology over the last three years, the majority of banks have yet to see any financial boost from their digital transformation programmes.
This is the finding from a report issued by Accenture into banks’ IT investment.
It looked at the technology development of 160 international retail and commercial banks against their financial performance to see if the money spent on new digital technology had reaped any financial reward.
While the study found that those banks who had invested most heavily in digital services had generated greater profit, this was largely due to cost savings rather than an increase in revenue.
The report also found that just 12% of surveyed banks have fully committed to digital transformation, 50% of banks made little progress and the remaining 38% are in the midst of their transformations but their digital strategies lack coherence, stated Accenture.
The issue has become increasingly critical for UK and European banks, argued Accenture, citing the arrival of new regulation such as PSD2 which is designed to boost competition among incumbent banks and new startups, as well as waning investor confidence in the traditional banking model.
However, given that investment in new technology has yet to significantly boost revenue, Accenture has argued for banks to look for more than an increased tech budget and to adopt a more risk-taking approach to innovation and new business models.
“Even the most digitally focused banks have a big challenge ahead and will need to find ways to generate new revenue as traditional fee income gets squeezed,” said Richard Lumb, group chief executive – Financial Services at Accenture.
“To achieve stronger returns on their digital investments, banks will need to radically increase market-share based on pricing, take an additional risk on new revenue opportunities or add services customers are willing to pay for.”
