Banks must adopt digital transformation strategies sooner rather than later to avoid disintermediation caused by the growing number of fintechs, according to a new white paper published by Efma and Oracle today.
Produced using findings from three Efma-hosted interactive webinars, the Digital transformation: The challenges and opportunities facing banks white paper outlines the challenges and opportunities facing banks in the digital world and highlights some of the digital transformation initiatives taking place in the financial services sector. The paper includes comments from webinar participants and Oracle Financial Services Global Business Unit’s senior director of digital experience Aubrey Hawes, and senior director of digital engagement Tushar Chitra. Findings from the report suggest that fintechs pose various threats to traditional banks because they are developing a range of digital offerings that enable them to serve customers more quickly and at lower costs. For example, while banks often regard fintechs as potential partners in the lending space, they view them as competitors in the payments space because they can process payments at a much lower cost. Efma’s report explores the speed of digital disruption, its impact on the financial services sector and other industries, and how the digital experience is redefining interactions between banks and their customers. It also examines the four ‘Ps’ of digital transformation – product, people, price and place (experience) – and the implications of deploying four different digital strategies. These include launching a digital brand, digitising processes, modernising the digital experience, and launching a new digital capability. In addition, the report highlights the opportunities for banks to develop new revenue streams and better manage their physical branches, ATMs and networks to provide customers with more digital services than their fintech competitors. To do this, Efma and Oracle recommend that banks take inspiration from other industries that have already faced digital disruption, and work collectively with regulators to modernise the regulatory framework so they can support more digital interactions and remain competitive. This includes developing digital wallets and finding new ways to capture and analyse customer data to provide more personalised advice and boost cross- and up-sell opportunities. “Banks need to be fully prepared for the digital future that lies ahead – but we believe that with the right strategies and the right mindset, they can turn these challenges into exciting opportunities,” said Vincent Bastid, CEO at Efma. The full report can be downloaded from here