Artificial intelligence on its way
AI is set to turn banking and insurance on its head over the course of the next decade. The survey shows that overall 83 percent of all respondents see value in AI. Brazil, the UK and Mexico lead the way in terms of AI importance, while in traditionally more cautious Germany and Switzerland just a few perceives AI to be strategic. With the implementation of AI, the questioned experts expect to achieve improvements across a wide range of business functions, ranging from Back Office to Customer Services Centre, Personal Financial Planning and Sales. How about the expected benefits? Operational cost reduction (71 percent) and achieving greater customer engagement (64 percent) are most important here. According to Statista, the global robo advisory market shows annual growth rates up to 41.5 percent. “Especially, the retail banking industry has access to vast amounts of unstructured data like customer information, which is currently not being used to its full extent. By utilising cognitive banking methods based on self-learning systems, this unstructured data can be processed and organised to generate weighted hypotheses on decision-making to service customers better and grow revenues”, states Marika Lulay, CEO of GFT Technologies SE.
Key drivers for the digital transformation
The results show, that the number one driver for improving the level of digitalisation within financial organisations is to satisfy the customers’ expectations as 60 percent of all respondents claim. Following the customers’ satisfaction are increasing revenues from new services or products (51 percent) and operational cost reduction (47 percent). With that, the number one driver for digitalisation remained the same compared to GFT’s 2016 Digital Banking Expert Survey, showing that the customer is really in the centre of attention. “Above all, major banks are facing though times. The digitalisation as well as the changed customer needs are a threat to the survival of many financial institutions in the retail banking sector but also a unique chance to become independent from regulated business by inventing new business models based on data”, states Marika Lulay, CEO of GFT Technologies SE.
Bank as a Platform approach as an important step on the digital transformation agenda
When it comes to concrete strategies, the BaaP approach seems to be in favour of many institutions. The BaaP vision is the idea that banks distribute their own products as well as those of third parties through Open APIs and front-ends, so that customers can easily and comfortable exchange information with multiple suppliers. 69 percent of all questioned banks have considered BaaP, 69 percent of them say BaaP will have a great to moderate impact on their business model. Increased customer engagement is seen as the main benefit of BaaP (62 percent), followed by the ability to develop new applications (55 percent) and lower operational costs (51 percent). UK and Spain lead the BaaP adoption, while Mexico, Brazil and Italy remain cautious with a large proportion of respondents not considering it.
A defined digital transformation strategy is the basis to shape the bank of the future
A considerable proportion of banks across all countries have a defined digital transformation strategy in place or are currently developing it. 34 percent of all respondents claim to have a defined digital transformation strategy, another 53 percent perceive themselves on a good way in terms of development. Almost all large institutions have a defined digital transformation strategy. The UK and Switzerland are at the forefront of this area – 100 percent of institutions of all sizes state that they have defined or are in development of their digital transformation strategy.
About the Digital Banking Expert Survey – conducted by GFT Technologies SE
This year, 285 professionals from small to large retail banks have been personally interviewed, in collaboration with market research firm Frost & Sullivan, to gain knowledge on current financial relevant topics like digitalisation of the banking industry, artificial intelligence and Bank as a Platform. Therefore the results become even more significant. The interviewees are mostly holding management positions up to the C-level management and decision makers of both, the business and the IT perspective. The survey focusses on eight countries: Brazil, Germany, Italy, Mexico, Spain, Switzerland, the UK and the USA.