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In 2022, nothing is business as usual for banks. At the turn of the year, banks were already struggling to keep up with the rapid pace of change in the banking sector, coupled with the after-effects of a global pandemic and rising consumer expectations – and the world continues to evolve. What passed for “good” last year is now superseded by digital innovations and experiences that continue to raise the bar. In addition, macroeconomic circumstances have deteriorated dramatically since last year. Global shifts in geopolitics, wars, regulatory developments and economic headwinds weigh heavily on businesses. Banks are under sustained pressure to future-proof their business models by increasing resilience, shoring up existing revenue streams and developing new ones.
Working with our parent company, Sopra Steria, and Forrester Consulting, we set about evaluating banks’ strategic focus and future-readiness in digital banking. (This paper is the second installment of the annual benchmark, following on from 2021’s report, Master ecosystems to be future-ready in banking.) Together, we conducted an online survey with 792 senior decision-makers at banks globally with responsibility for credit/lending, customer experience, digital banking, open banking or ecosystem initiatives, payments and the technology stack.
We found that while banks have made considerable progress on their digital banking transformations, new circumstances and environments hinder their path to future readiness, leaving most feeling less confident. As a result, banks will further extend their collaborative business models and rely more heavily on their vendors for assistance in coping with fast-moving market dynamics.
Future-proofing business models
With a looming downturn, future-proofing business models is an even stronger imperative for banks. A third of banks fear an economic recession while supply-chain disruptions have already impacted their businesses. Banks have to split their attention between innovating to counter the downturn and increasing operational resilience, while having to cut back on budgets and headcounts.
Roadmaps and revenue streams
Banks restructure their future roadmaps to build resilience and capitalize on growth opportunities. Immediate imperatives include fortifying cybersecurity and supply chains to bolster resilience. Simultaneously, banks are prioritizing the creation of new revenue streams, such as by improving environmental sustainability and supporting the financial well-being of customers.
Digital transformation
Banks are struggling to transform by themselves. Transformation is proving hard for banks as their confidence in their future readiness decreased this year, with the biggest drops in process and structure, and cross-functional, agile collaboration – both crucial aspects to drive change and evolution towards collaborative business models.
Outsourcing to third parties
Banks will rely more heavily on their vendors for assistance in coping with fast-moving market dynamics. Almost two thirds of banks (65%) prefer to turn to third parties rather than build homegrown solutions. Investments go to higher tech vendors with capabilities that help banks move the needle with their ecosystem ambitions, as challenges become more acute and environments more difficult.
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