According to the World Retail Banking Report 2020, over half (57%) of consumers now prefer internet banking, up from 49% pre-COVID-19.

55% consumers currently prefer banking mobile apps, compared with 47% previously.

The report, prepared jointly by international consulting firm Capgemini and international banking association Egma, indicates that banks need to evolve into platform-based models to fuel the growth and innovation needed to stay competitive. According to the report, embracing Open X (an open platform approach in which participants of all sizes and from across industries work together) will be critical to long-term success.



“Consumers expect a seamless digital experience from their financial providers, as they’ve grown accustomed to BigTechs in other parts of their lives. Traditional banks are being challenged to meet these expectations given that digitally native new entrants focus on customer experience from day one. Banks that invest now in modernizing their core technology and evolve it to a platform-based experience will simultaneously delight customers and grow profitably,” said Anirban Bose, CEO of Capgemini’s Financial Services.

CEO of Efma John Berry has highlighted that the modernization of legacy systems must be prioritized by banks looking to accelerate their growth “as customer expectations are ever increasing and those that neglect this risk falling behind”.



“Having prioritized near-term profits over long-term sustainability, some banks have an accumulation of legacy systems in place. This situation makes it a challenge to integrate emerging technologies, which is affecting customer experience and operational excellence. Yet, despite legacy system challenges and the advantages of a modern core, banks are reluctant to take transformative action because of the levels of resource required and the risks associated with inefficient implementation,” reads the reports.

Bank executives recognize the obstacles to moving to a platform model. The report found that 80% of bank executives cited cybersecurity and privacy concerns, outdated data management (68%) and identifying the right partners (73%) as primary barriers to moving to a platform system.

The report also outlines how banks can overcome their challenges and approach core banking transformation through strategic, integrated and collaborative orchestration. Research shows that progressive modernization is the preferred evolution method (54%) among bank executives, allowing banks to upgrade the most critical functions and incrementally transform legacy systems.



Partnership is also a clear accelerant for banks’ success. Two-thirds (66%) of bank executives say it takes 1-2 years to innovate and launch a new concept when working alone; 58% reported that it takes less than a year to launch a product in collaboration with FinTechs/BigTech partners.

Regulatory and compliance issues (72%) and poor IT compatibility (72%), however, are identified as barriers to effective collaboration.

“The Open X model acts by helping banks lower operational costs and move from a high fixed investment in IT development to a more cost-effective and flexible cost model that incorporates specialized players in the ecosystem. Banks that embrace platform models can expand their market reach, improve operational efficiencies, increase business profitability and offer differentiated, personalized products and services over their traditional competitors,” reads the report.

The report includes insights from focused interviews and surveys with over 80 senior executives of leading banks across regions.

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