Leading banks bet big on innovation, tech and talent

In part 3 of our Global Banking Benchmark Study series, we explore the mindset and behaviors that are helping ‘transformation leaders’ become digital-first.

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.

They are also responding to increased pressure to perform as a result of new entrants to the sector, which often have specialist technology skills and are typically free from the burden of legacy systems. Low interest rates have created the need for greater efficiency and the COVID-19 pandemic has created a need for accelerated change, with customers’ digital engagement increasing faster than might otherwise have been the case.

Publicis Sapient’s Global Banking Benchmark Study identifies transformation leaders as those that are responding most quickly to the changing financial services environment.

Who are the Transformation Leaders?  - Our research finds that today's banks fell into four groups based on their current level of progress in two areas that are critical to digital innovation: customer experience and operational transformation.
Who are the Transformation Leaders? - Our research found that banks fall into one of four groups based on their current level of progress in two areas that are critical to digital innovation: customer experience and operational transformation.

Technology + Talent = Success

These leaders are realistic about how they will transform, as well as where they need to focus their efforts. For example, 42% of transformation leaders say they are prioritizing intelligent technologies, while 35% are focused on agile capabilities. In parallel, 37% of transformation leaders are focused on existing talent development, working to replace traditional skills with digital knowhow – understanding that people, as much as technology, will power industry transformation.

Transformation leaders are prioritising intelligent technologies, along with talent development in order to help ensure they’ve got the skills needed to power industry transformation.

Sonjoy Phukan, Global Chief Operating Officer at the Bank of Singapore, says, “We've always been educating our colleagues on digital competencies by leveraging online learning tools to teach them about design thinking and agile practices. COVID-19 has allowed us to put that theory into practice.”

There will be a range of opportunities to accelerate transformation for banks that think in the broadest terms, rather than focusing on technical competencies. For example, 29% of banks say greater investment in cloud technologies will help them deliver on their digital transformation plans for the years ahead.

Stefaan Decraene, Head of International Retail Banking at BNP Paribas, says that organizations need to change their mindsets and cultures. “We are fostering young people and talent to come up with ideas. We run contests that generate new initiatives – sometimes highly disruptive – and if we think the initiative is good, we finance it.”

Greater investment in both cloud-based technologies and intelligent technologies are expected to be the most beneficial in helping banks deliver on their digital transformation plans in the next three years.
“We run contests that generate new initiatives – sometimes highly disruptive – and if we think the initiative is good, we finance it.”

Stefaan Decraene

Head of International Retail Banking

BNP Paribas

Collaboration delivers higher returns

While the leaders are slightly more likely to push tech and talent development than other banks, the biggest disparities between the top performers and the rest are to be found in their views on how to close the gaps. Around 31% of transformation leaders say they see the value of a more innovative distribution network, while only 24% of other banks see this value. Around 25% of transformation leaders stress the need for increased cross-functional collaboration, compared to 21% of banks overall. And 22% are interested in expanding their networks of partners, against 20% of all banks.

The banking industry’s leaders recognize that transformation requires new ways of working, within their organizations and across a broader ecosystem of stakeholders.

For La Banque Postale, this approach is enabling faster delivery of better customer experiences. “We have started to build different squads that are working on API web services and developing and connecting with ecosystems of partners and fintechs to understand their main assets for user experience and technology and accelerate how we bring new initiatives to our customers,” says Alexandre Giros, Directeur du Digital at La Banque Postale.

“We are connecting with ecosystems of partners and fintechs to understand their main assets for user experience and technology and accelerate how we bring new initiatives to our customers.”

Alexandre Giros

Directeur du Digital

La Banque Postale

A customer-first approach to innovation

In their efforts to put the customer front and center, transformation leaders share a clear focus on agility and agile product innovation. This has already paid off, 99% of these banks say their operational transformation progress enabled them to shift at speed to flexible and remote working during the pandemic.

Looking forward, these leaders are conscious of the importance of keeping customer needs top of mind in their transformation endeavors; almost all say customer experience is a key metric at the highest level of their business.

For this reason, 41% of transformation leaders are prioritizing innovation of core product streams. Equally, 37% of the leaders say they are developing products and services that blur the lines of traditional financial-services offerings. These services must be available; however, the customer wants to access them – 31% of leaders are focused on omnichannel offerings that enable a seamless customer journey.

As consumer usage patterns evolve, banks are prioritising innovation in their core product streams, as well as new offerings that blur the lines of traditional products.

“Customers are using desktop less and less, and even tablets are plateauing,” says Philippe Duban, Global Head of Business Transformation, Wealth and Personal Banking at HSBC. “But mobile use is increasing quickly, with one-third of our mobile customers checking their bank balances every single day on their phones. In order to support them, we need to give them access to the right tools to suit their changing needs.”

Nor should banks overlook customers who are not yet ready to engage with them in these ways. One striking finding of this research is that transformation leaders are more likely to prioritize support for customers who lack digital skills – 91% of leaders feel this is important, against 77% of banks overall.

Banks must now develop a better understanding of what all their customers need, says Allison Beer, Chief Product Officer and Head of Customer Experience and Digital for Consumer & Community Banking at JPMorgan Chase. “It's about putting the customer front and center and making it easier for them to manage their financial lives. Everything else flows from that.”

In our 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.

    More insights from our Global Banking Benchmark Study series:

  • Four ways banks can become digital-first leaders

    What lessons can be learned from those who are confronting the challenges of digitization, the threat posed by digital-first challengers and who have embraced opportunities for change? A focus on customer and operational leadership.

  • 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?

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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.