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How to win the digitalization race in banking
Digital Banking Maturity 2020: what makes a digital champion?
More and more, banks are responding to the digital (r)evolution. COVID-19 is speeding up this process. It has been fast-tracking the development of digital channels all around the world. So, what makes a bank a “digital champion” and how do these champions stand out, as compared to smart followers, adopters, and digital latecomers? What trends do we see in the field of Digital Banking Maturity?
Digital Banking Maturity
Around the world, advancements in new technologies such as AI, blockchain and cloud have been transforming all kinds of industries, including banking. Deloitte has been investigating the level of digital maturity in the retail banking sector for a while and recently published the Digital Banking Maturity 2020 report. This study represents the 4th edition of the largest global benchmarking of retail banks, answering what leaders are doing to win in the race towards digital transformation. The study provides a comprehensive outside in ’mystery shopper’ assessment covering 318 retail banks, across 39 countries. The focus is on 6 stages of the retail customer journey across 3 different digital channels, which results in over 1.1k functionalities having being benchmarked.
What makes a bank a digital champion?
A digital champion in the context of this study is defined as a retail bank that offers a wide range of functionalities relevant for customers and a compelling user experience. These digital champions set key digital trends and have leading market practices, which make them examples to learn from. Our study has concluded that 81% of digital champions are incumbents who in comparison to their peers achieve on average 4 p.p lower C/I and 1.9 p.p higher ROE. The remaining 19% of digital champions are challenger banks who are typically retail focussed, small and digital only.
Some of the key observations that can be found in Digital Banking Maturity
- Along the customer journey, champions lead the way especially in expanding the relationship, which together with products and personal finance management was their key investment priority over the last 2 years
- The mobile channel is as important as the internet for champions in account opening
- Ecosystems are widespread among champions but the introduction of services visible to customers has been relatively slow
- Customer prefer digital channels for transactions and savings, with champions also taking a lead on digitising end-to-end opening of credit products
- In a low interest rate environment, champions are better prepared to offer customers fee generation investment products
- End-to-end sales of non-life insurance is relatively well developed whereas life insurance still requires human interaction
- Value added services do not yet play a critical role in the customer value proposition but they differentiate banks from traditional banking services and can thus be leveraged as acquisition hooks
If you are interested in learning more about the study or the detailed results in relation to your financial institution – please contact our experts. Please find more detailed information in the Digital Banking Maturity 2020 report.