Banks and credit unions know they are behind the digital 8-ball, so most are ramping up their investments. As financial institutions tee up the necessary resources, most say they expect to see significant gains. But experts caution that just implementing some digital projects should not be confused with true transformational change.
When it comes to digital transformation in the banking industry, the Holy Grail is to have a culture of innovation embedded in the financial institution’s DNA. Few do yet, but banking providers at least appear to be making progress.
What many increasingly recognize is that becoming truly a digital-first institution not only removes the existential threat — a purely “survival instinct” — but is actually a clear path to increased profitability.
According to a study by BDO, nine out of ten financial institutions in the survey say they either have a digital transformation strategy or are developing one. And almost two-thirds of respondents in the survey say they anticipate revenue gains of 10% of greater within three years, if they take appropriate steps now. Of course that’s a big conditional “if.”
Plans mean little without execution and implementation. Only one in seven of those with a digital transformation plan are actually in the process of implementing the strategy. 29% admit they are still formulating their strategy.
“Without a strategy, it’s easy to get lost in the weeds — wrapped up in a variety of digital projects that may, or may not, actually get you where you want to go,” states Malcolm “Chip” Cohron, National Digital Transformation Services leader within BDO’s Technology and Business Transformation Services practice. “The mistake we often see financial institutions make is confusing digital implementation with digital strategy. An implementation project should deliver immediate ROI, but it isn’t, in and of itself, transformational. It’s only when all of these projects lead to a bigger goal that digital transformation is truly effective.”