A.T. Kearney: Banking transitioning to a digital world

05 March 2015 Consultancy.uk 3 min. read

Banking is becoming dominated by tech savvy mobile technology using customers, a recent study by A.T. Kearney and Efma finds. Banks are finding themselves at different stages of preparedness for a potential new way of interacting with their customers. Banks that embrace a digital culture will, according to the report, be agile and meet the coming changes toe-to-toe. 

In the second joint study by A.T. Kearney and not-for-profit organisation Efma, the digitisation of retail banking across the globe is explored. The study is based on interviews conducted with more than 25 executives in charge of digital or multichannel in the retail banking divisions of 22 leading banks. The respondents engaged the general question “How is the bank implementing its digital transformation?”, as well as an open questionnaire touching upon five key themes: strategic intent and objectives, transformation approach, organisation and governance, success factors and lessons learned, and the specificities regarding physical branches and the insurance business. 

Digital climbing
The survey finds that the digitalisation of the banking system has moved onto mobile platforms, with 85% of the executives interviewed saying that mobile is the cornerstone of their digital strategy going forward.  While in 2014, smartphones made up half of the market, this number is expected to be as high as 80% by 2020. One Latin American noting: “This year, transaction volumes for mobile have overtaken volumes across all the other channels.”

Digital channel development

Approaching the digital
Almost all banks are investing in keeping up with consumer demand for digital services provided to their mobile devices, the approach through which banks are investing in digitalisation, however, differs between banks. The authors identify three broad approaches: treating digital as a project, treating it as a business, and treating it as a core value.

The first, which includes roughly one quarter (26%) of the retail banks examined, sees digital merely as a project, with pilots and gradual deployment, and not as a central feature, but do engage in long term planning. The second, the ‘advanced group’, which includes 42% of retail banks in the study, considers digital a business within their umbrella that uses a test-and-learn approach. Engaging with digital to deliver clear, long-term vision and ambition, client-centric focus and open innovation, and cross-functional teams mixing IT, distribution and marketing. The last, including 32% of the banks, take what is called the ‘boosted’ approach where they have a ‘pure player’ (such as a subsidiary) inside the firm and a digital culture from top to bottom. 

Digital development rank

Banking on an agile future
According to the report’s transformation map, banks with the approach of digital as core value are the most prepared for a digital future. By creating a tech savvy culture banks will have the capabilities to be on the cutting edge, making it easy to react and pioneer way of engaging increasingly mobile using customers. This will mean fewer physical branches and more mobile services, with banks needing to facilitate a customer experience that is both complementary and consistent in all channels.

Transformation road map