Four Ways Banks can Become Digital-First Leaders

In this final article of our Global Banking Benchmark Study series, we set out the lessons that banks can learn from ‘transformation leaders’, to deliver their own digital-first ambitions.

Publicis Sapient’s Global Banking Benchmark Study identifies an elite cohort of banks that are currently leading the way to a digital-first future. These are the banks that have moved fastest to confront the challenges of digitization, including the threat posed by digital-first challengers, and embraced the opportunities of change. They accomplish this through a focus on customer experience and operational innovation.

Banks like ING are leading the way. “As digital-first capabilities evolve, there will be an increasing shift away from branch banking, says Marco Eijsackers, Global Head of Digital Transformation at ING. “You'll probably just be, for example, driving home, thinking about your retirement, and the technology in your car will enable you to take care of your financial needs at that moment.”

Crucially, these transformation leaders recognize that technology enables broader change and isn’t an end in itself. So what lessons can banks learn from the 14% of their industry peers that are charting the way forward on digital-first?

1. Know your competitors

The rise of digital-first challengers is reshaping the competitive landscape of banking. Incumbent financial-services firms must now respond to the threat posed by rivals that do not have to cope with legacy systems as they develop customer-centric digital propositions. Some of these challengers moving into banking come with significant resources, others are fintech start-ups with the agility to move at speed.

Transformation leaders are aware of this threat and moving to confront it. Notably, 67% of these banks recognize that they are not investing in digital innovation at a level sufficient to keep pace with digital-first challengers, and 37% say their transformation priorities are influenced by consumer technology companies.

2. Transform your people and culture

New tools are only part of the picture of transformation. Banks need a workforce that has the imagination to see what technology might deliver for customers and the skills to put that vision into practice. That requires upskilling and cultural change throughout the organization.

Leading banks recognize that technology, people and culture go hand in hand: 29% of transformation leaders say lack of workforce skills need to digitally transform were a barrier to transformation, against 24% of banks overall. Moreover, 19% of leaders highlighted a change-averse workplace culture as a barrier, against 17% more widely.

Although also a catalyst for change, the COVID-19 pandemic has also been a significant barrier to change when it comes to banks’ digital transformation efforts.
“We can invest in technology for technology's sake, but building the culture, building the understanding of data and design thinking, and prioritizing use cases are more important.”

Sonjoy Phukan

Global Chief Operating Officer

Bank of Singapore

3. Invest in a partner ecosystem

The proliferation of digital technologies requires today’s banks to adopt a more collaborative business model. For example, new partners may provide competencies that a bank currently lacks. Similarly, new distribution networks offer an opportunity to reach a broader customer base.

Transformation leaders are rapidly building these relationships. Already, 27% say the ability to distribute products across all channels is a core trait of a digitally innovative firm, against 24% of banks more widely. As a result, 98% of these leaders believe their partner network is sufficiently broad to compete with nimble, digital-first firms.

Transformation leaders are far more likely to realise the need to make stronger use of a partner ecosystem to deliver on their digital transformation goals.

“To accelerate change, we cannot do everything on our own,” says Xavier Guilmineau, Head of Retail & Small and Medium-sized Enterprises for BNP Paribas’ International Retail Banking Division. “We have to foster partnerships. For instance, to further move to a customer-centric approach, boost ‘gains,’ and remove ‘pain points,’ we are constantly researching which fintechs can help.”

“To accelerate change, we cannot do everything on our own; we have to foster partnerships.”

Xavier Guilmineau

Head of Retail & SME – International Retail Banking

BNP Paribas

4. Be agile to move at speed

The traditional approach to product and service development in banking has relied on set-piece launches developed and delivered over lengthy timescales. But in a digital-first marketplace, the emphasis is on innovation at speed and scale – often relying on a more iterative approach to developing the customer proposition.

Leading banks have grasped this shift and are focused on building urgency. For example, 40% of these organizations believe agile product development is a key trait of digitally innovative financial services firms, compared to only 30% of banks overall; and 35% are prioritizing investment in agile capabilities.

Is this all easier said than done? Allison Beer, Chief Product Officer and Head of Customer Experience and Digital for Consumer & Community Banking at JPMorgan Chase believe banks that can internalize these four priorities will seize a golden opportunity. “We have the opportunity now that we didn't have just five years ago to automate more and more things in real-time. This is something customers have been telling us they want more of and you’ll see more of that in 2021.”

    The Global Banking Benchmark Study series:

  • Are banks ready for a digital-first future?

    Incumbent banks are embracing digital in their transformation efforts – but are they moving fast enough to put digital and customers first? For banks that had been grappling with digital transformations, the impact of COVID-19 was an unexpected reckoning.

  • How banks are making the leap from aspiration to action

    Banks are looking to the future, and it’s clear that the time for talking about digital transformation is over – so how can banks make the move from digital laggard to digital leader?

  • Leading banks bet big on innovation, tech and talent

    What sets today’s leading banks apart from the rest? It’s not just that these leaders have moved faster and further with transformation, but that they are working hard to identify the barriers preventing them from being truly digital-first and working to overcome them.

Get in touch

Speak to a Publicis Sapient consultant

See how we can help you get ready for a digital-first future.

About the research

Data in this article comes from a global survey of 1,041 senior financial services executives conducted by Publicis Sapient in collaboration with Longitude, a Financial Times company.

In addition to the quantitative research, a series of in-depth qualitative interviews were conducted with senior executives from six globally leading financial services firms.