Banks’ digitalisation skyrockets in the wake of COVID-19 and increased competition

Research finds an average digital maturity score of 3.27 out of 5 for financial institutions as COVID-19 and the rise of neo-banks forces evolution.

Digitopia, a leading digital maturity consultancy headquartered in London, UK, has today released the preliminary findings of its Banking Digital Maturity research, in conjunction with Union of Arab Banks (UAB) Digital. The findings show that organisations within the banking industry are taking significant steps within their digital transformation journeys, particularly through data analytics, technology adoption and use, and upskilling their employees.

Digital maturity has become the gold standard to measure organisations’ overall digital transformation state. Banks are undergoing severe digital transformation. With the rapid rise of neo-banks, which are challenging those still operating with legacy systems, and new players on the block capable of money transfers, payments, and other financial services, competition is fierce.

The pandemic has also increased the pace and scope of change. The research shows rapid evolution in digital maturity over the last two years in the banking industry – particularly in customer experience, operational excellence, and technology adoption. 

The research, which was conducted in two parts – firstly from March to September 2020, and again in March through to May 2021 – assessed more than 10 banks, a series of Digitopia customers and UAB members. In order to collect their findings, Digitopia and UABDigital compounded information gathered from detailed interviews with 80 executives of participating banks with a partial scope of Digitopia’s Digital Maturity Index (DMI) to explore each company’s digital maturity levels.

Digitopia’s DMI service is a comprehensive and accessible digital maturity model and methodology, analysing digital maturity levels across 6 core dimensions to provide an organisation’s personalised score, benchmark them against peers, provide prioritised recommendations and a roadmap.

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Judged across each of the six dimensions – technology, governance, innovation, people, operations and customer – the average digital maturity score for the banking sector sits at 3.27 out of 5. The Banking Digital Maturity research shows a significant amount of development over the last 24 months – has improved, on average, by 0.2 maturity points per year. The findings are concluded with the following key takeaways:

• Data is acknowledged as a key asset and analytics capabilities are developing
• Organisations know the importance of prioritising customer experience 
• There is progress in terms of:
  • Technology use
  • Integration of processes
  • Developing employee skills
• Businesses are applying new ways of working
• A considerable number of business critical decisions are data-led 
• Further improvement requires following a clear strategy and a roadmap aligned as a company

The study found that no particular dimension lags behind others. Organisations perform the best in technology (3.51), while customer (3.14) is the lowest scoring dimension. People and organisations score 3.19, respectively, and innovation (3.22) and governance (3.36) complete the scoring.

While there is little difference between dimensions, the gap between leaders and laggards within each dimension is significant. Most notably, leaders in innovation score 4 out of 5 on the DMI, whereas laggards fall at 2.3. Specifically, leaders generally leverage ecosystems better for value add, whereas laggards are yet to execute basic processes.

Overall, technology investments are paying off, and while a ‘digital-first mindset is prevalent among executives, it is yet to be embraced by everyone. The research also finds that employee satisfaction, performance and skills matter to organisations, and customer experience is valued. However, there is still room across the board to truly omnichannel and apply advanced analytics.

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Halil Aksu, CEO and co-founder of Digitopia, said: “The Banking Digital Maturity findings offer a unique insight into the digital transformation efforts of the finance industry. Over the last year, organisations worldwide have turned to digitalisation to continue operating effectively and provide the best possible value to their customers. It’s fantastic to see these banks putting so much effort into their transformation; they are making strong progress, and end-customers, as well as the financial institutions themselves, will benefit greatly as a result.”

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