Written by Tess Bennett Which-50
There are few other industries outside of banking with a more drastic need to transform to ensure their long-term survival.
That’s the view of the analysts at IDC, which at the same time acknowledge the industry is faced with a sizeable IT challenge, ironically caused by being early adopters of technology since the 1970s which has created hundreds of disparate systems with little or no interoperability.
The report, IDC MaturityScape Benchmark: Digital Transformation in Banking Worldwide, 2018* divides banks into five maturity stages: ad hoc, opportunistic, repeatable, managed and optimised.
While all 125 banks IDC surveyed acknowledge the importance and complexity of transforming their businesses to compete in this new digital economy, nearly 40 per cent have not yet executed on a sustainable digital transformation strategy.
Those 40 per cent are still at the ad hoc or opportunistic stages of maturity. IDC puts this lack of maturity down to key challenges such as the difficulty overhauling a multitude of legacy technology and process and, the “sluggish nature” of organisational change.
Just over 50 per cent of the banks surveyed fall into the repeatable and managed levels of maturity, where IT becomes an enabler of business strategy.
And the smallest group — 8 per cent — have optimised their digital operations to the point of becoming digital disruptors, and are exploring data monetisation or offering non-traditional financial products.
C-suite and board commitment to digital transformation is a common trait among the banks which are succeeding, according to IDC.
For those still in a reactionary or ad hoc stage of digital transformation, IDC believes that failure to recognise the need to at least join the digital revolution in financial services bodes ill for its survival in the long term.
“Banks no longer have a choice but to transform if they want to become more responsive to today’s and tomorrow’s markets,” says Jerry Silva, director, Global Retail Banking at IDC Financial Insights.
“Those banks that have committed to digital transformation at the board and C-suite level are already creating disruptions that are taking the industry to business models beyond banking.”
Silva warns that banks which chose to ignore digital transformation, or think it’s just a buzzword, will perish over the next decade.
*The survey findings are contained in the report IDC MaturityScape Benchmark: Digital Transformation in Banking Worldwide, 2017 (IDC #US43312417) authored by Jerry Silva, Karen Massey, Lawrence Freeborn and Michael Araneta.
This article was originally published on Which-50 and has been republished here with permission.