Banks and insurers underestimated the magnitude of the digital transformation challenge.
A new report by the Capgemini Research Institute has found that financial services firms are lagging behind in digital transformation compared to other industry sectors. Financial services firms report falling confidence in their digital capabilities, and a shortage of the skills, leadership and collective vision needed to shape the digital future.
The report, part of Capgemini’s Global Digital Mastery Series, examines sentiment on digital and leadership capabilities among bank and insurance executives, comparing it to an equivalent study from 2012. Over 360 executives were surveyed from 213 companies whose combined 2017 revenue represents approximately $1.67 trillion.
Key findings include:
Confidence in digital and leadership capabilities has sunk since 2012-
Compared to 2012, a smaller proportion of financial services executives said their organizations had the necessary digital capabilities to succeed – with the confident few falling from 41 percent to 37 percent. Breaking this down, although more executives felt they had the required digital capabilities in customer experience (40 percent compared to 35 percent), confidence in operations saw a significant drop. Only 33 percent of executives said they had the necessary operations capabilities, compared to 46 percent from six years ago.
Digital Mastery proves to be illusive-
In Capgemini’s digital mastery framework presented in the report, just 31 percent of banks and 27 percent of insurers are deemed to be digital masters, while 50 percent and 56 percent respectively are classified as beginners.
Executives also criticized the lack of a compelling vision for digital transformation across their organizations. Only 34 percent of banking and 24 percent of insurance respondents agreed with the statement that ‘our digital transformation vision crosses internal organizational units’, with just 40 percent and 26 percent respectively saying that ‘there is a high-level roadmap for digital transformation’.
Banking transformation has taken center stage, while insurance places focus on automation-
Although banks’ digital transformation journeys are well underway, the industry has reached a crossroads, cites the report, as it attempts to meet the rising digital expectations of customers, manage cost pressures, and compete with technology upstarts. Fewer than half of banks (38 percent) say they have the necessary digital and leadership capabilities required for transformation. Insurance is catching-up with only 30 percent claiming to have the digital capabilities required and 28 percent the leadership capabilities necessary.
The banking sector does, however, outpace non-financial services sectors on capabilities such as customer experience, workforce enablement and technology and business alignment. Fifty-six percent of the banking firms said they use analytics for more effective target marketing (in comparison to 34 percent insurance and 44 percent non-financial services sector). More than half (53 percent) of banking organizations also said that upskilling and reskilling on digital skills is a top priority for them (32 percent for insurance and 44 percent for non-financial services sector).
