What’s next in Banking?

Five key insights from 197 industry leaders

In today’s highly competitive banking and financial services (BFS) landscape, digital transformation represents the silver bullet solution for institutions and BFS providers to enhance their customer experience. In the name of retaining customers, financial institutions must be more explorative with tech innovations to ensure they are equipped to capitalise on evolving market trends.

Below, we have provided a comprehensive, banking–specific spotlight on Expleo’s Business Transformation Index 2023 report. From our commissioned global research, we reviewed the data of 197 senior banking and financial services professionals to showcase the prevailing business trends of the future.

1.
Think like a customer services company

Across the industry spectrum, traditional banks have failed to adapt quickly enough to evolving consumer expectations. In 2022, banks continue to face stiff competition from disruptive and agile fintechs that are offering unprecedented levels of customer-centricity and rapidly claiming significant market share.  

Banks now have to think like a consumer services company, and move away from the traditional product-based business model. Moreover, they must focus on building operational resilience and winning the war for talent, while addressing a litany of pain points such as: 

Targeted digital transformation initiatives present unique opportunities to greatly enhance customer service capabilities for BFS providers. Findings from our Business Transformation Index (BTI) 2022 report show that 58% of Financial Services companies are currently seeking to improve how they deliver the best customer experience through digital transformation.

Which of these focus areas is your organisation seeking to improve through digital transformation?

Delivering the best customer experience

Increasing productivity

Innovation/bringing new offerings to the market

Transforming our business model/ways of working

2.
Prioritise data-led decision-making and robust privacy measures

In order to thrive in today’s hyper-competitive global economy and offer the best possible service to customers, financial institutions must be equipped to develop a multi-faceted understanding of their target audience, informed by up-to-date, domain-specific data insights.

The implementation of new data systems designed to collect rich analytical data from sensors and actioning of data will be instrumental in helping financial institutions establish a new suite of B.I. (Business Intelligence) reporting. However, with great data power comes great responsibility. To effectively mitigate the risk of damaging data incursions and setbacks, banks must take proactive action. This could include embracing data privacy automation while implementing data safeguards and protection software that help guide privacy programs, automate processes and navigate through applicable data privacy laws. For additional information, check out our blog article on the BFS data privacy landscape.

In the years ahead, we can also expect to see Process Automation become a cornerstone of customer service capabilities and product delivery within the BFS sector. The benefits of Process Automation would extend to loan processing, the automatic generation of reports, customer onboarding and account opening, Know your customer (KYC) and Anti-Money laundering (AML) processes.  The below graphic illustrates the perceived benefits of Process Automation in the eyes of BFS respondents.

Which of the following do you see as the biggest benefits of process automation to your organisation?

Accelerates provision of digital services for customers

Speeds up processes

Helps employees to focus on value-adding tasks

Accelerates speed to market with new products/services

Reduces costs

3.
Embrace banking ecosystems and the Embedded Finance trend

The contours of banking are now being redefined to encompass the emergence of niche neobanks and Banking-as-a-Service solutions built on the principle of customer-centricity.

Open Banking directives designed to increase competition between financial institutions and transfer ownership of financial information from banks to customers are changing the game considerably. 

state that a major barrier to implementing transformation was not adopting an ‘open’ approach to systems design that enables collaboration

Intuitively, successful digital transformation will often hinge on changes to system designs and an end to the siloed way of doing business. However, having an open approach to system design is easier said than done.

Due to the pace of change, banks can no longer develop all the best-in-breed products, services, capabilities and personalized experiences that customers demand by themselves. Thankfully, they no longer need to be strong in every aspect, and can rely on partnership synergies with agile fintechs, whom they must learn to coexist with.

So, a culture of cross-platform collaboration should become the industry standard, aided by the Embedded Finance movement. This refers to the embedding of financial services within existing operational frameworks, enabling both non-financial and financial companies alike to broaden their service portfolios and market share.

4.
Execute targeted digital transformation initiatives

The confluence of ongoing societal and regulatory changes is forcing banks to embrace digital transformation with a sense of urgency.  If these strategies are executed in an agile manner, innovation can be tethered to evolving consumer trends in the years to come. This new progressive approach will require significant financial firepower, but thankfully, greater tech expenditure has been forecast.

By how much do you expect your organisation’s technology budget to change over the next 5 years?

Which technologies will be focus areas in the next 1 to 2 years?

Additionally, it is clear that one of the main drivers of the digital transformation agenda is customer expectations, with 48% of BFS respondents citing this as their top influencing factor.

Top 3 influences that have created the most pressure for your organisation to transform

Customer expectations

Cost reduction

Legacy / end-of-life existing technology

While encouraging to see an increased appreciation for digital-led initiatives, the road to digital transformation excellence is dotted with roadblocks.

For example, 46% of Financial Services businesses identified upgrading legacy IT systems as their top challenge to digital transformation success.

of respondents identified legacy IT systems as their top challenge to digital transformation

Which of the following do you identify as problems when your organisation is implementing new business and digital transformation initiatives?

Lack of skills / experience internally to competently manage emerging technologies such as AI/ML, AR/VR etc.

Not clearly understanding which technologies can deliver the required business benefits

Under-utilisation / poor acceptance of new digital solutions

5.
Address skills shortages with Automation, AI & Upskilling

Moreover, BFS is among the most affected sectors by technology skills shortages, which can have quite an adverse effect on customer service delivery. This trend is particularly pronounced within the wealth, investment banking and fund management realms.

The pressure on skilled resources also shows through in a significantly higher proportion of BFS firms identifying stretched internal IT teams as being a top barrier to progress, and 52% pointed to internal skills gaps in managing emerging technology as an issue. However, 31% of BFS respondents acknowledged that deployments of Automation and AI would be leveraged to solve the challenge of skills shortages. Given the foreseeable constraints on the level of digital literacy of their workforce, 76% of respondents acknowledged that more ambitious use of automation in their processes would be a prerequisite for success. 

acknowledged that more ambitious use of automation in their processes would be a prerequisite for success

7 in 10 organisations feel they need to more strongly embrace low-code and no code approaches

Looking ahead, it will be critically important that humans are firmly kept in the loop amidst the integration of Automation and AI solutions. In the coming years, the widespread introduction of internal upskilling programmes will play a central role in addressing skills gaps. This will also go a long way towards strengthening brand equity with existing employees, while helping to attract and retain top talent. These internal ‘Academies’ can be used to deliver tailored workshops and custom in-house courses via blended learning approaches. We can also expect to see further adoption of low code/no code programs, enabling business professionals to use complex applications without the need for specific application experience.

Our extensive research found that the success of transformation is intrinsically linked to the readiness of the entire organization to embark on this journey. It’s about boldness of vision at board level, combined with a more radical digital mindset and culture among employees, the appropriate nurturing of talent and teams, and the smooth execution of demanding timelines.

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Discover how to integrate AI at scale across your business

What’s next in Banking?

Five key insights from 197 industry leaders

1.
Think like a customer services company

Which of these focus areas is your organisation seeking to improve through digital transformation?

2.
Prioritise data-led decision-making and robust privacy measures

Which of the following do you see as the biggest benefits of process automation to your organisation?

3.
Embrace banking ecosystems and the Embedded Finance trend

4.
Execute targeted digital transformation initiatives

By how much do you expect your organisation’s technology budget to change over the next 5 years?

Which technologies will be focus areas in the next 1 to 2 years?

Top 3 influences that have created the most pressure for your organisation to transform

Which of the following do you identify as problems when your organisation is implementing new business and digital transformation initiatives?

5.
Address skills shortages with Automation, AI & Upskilling

Discover our services

Strategic consultancy & CX

Hyperautomation

Advanced UI & total experience

Big data

Architecture & integration

Business agility

Training & upskilling

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About Expleo

Discover how to integrate AI at scale across your business

What’s next in Banking?

Five key insights from 197 industry leaders

1. Think like a customer services company

Which of these focus areas is your organisation seeking to improve through digital transformation?

2. Prioritise data-led decision-making and robust privacy measures

Which of the following do you see as the biggest benefits of process automation to your organisation?

3. Embrace banking ecosystems and the Embedded Finance trend

4. Execute targeted digital transformation initiatives

By how much do you expect your organisation’s technology budget to change over the next 5 years?

Which technologies will be focus areas in the next 1 to 2 years?

Top 3 influences that have created the most pressure for your organisation to transform

Which of the following do you identify as problems when your organisation is implementing new business and digital transformation initiatives?

5. Address skills shortages with Automation, AI & Upskilling

Discover our services

Strategic consultancy & CX

Hyperautomation

Advanced UI & total experience

Big data

Architecture & integration

Business agility

Training & upskilling

1.
Think like a customer services company

2.
Prioritise data-led decision-making and robust privacy measures

3.
Embrace banking ecosystems and the Embedded Finance trend

4.
Execute targeted digital transformation initiatives

5.
Address skills shortages with Automation, AI & Upskilling