Digital transformation is important for traditional banks because they have to compete with fintech startups and large technological companies.

Rusbase reports that according to the Digital Banking Report, market players take it into account: 75% of the world’s banks identify digital transformation as their chief priority for 2020-2021. The second most important priorities are improvement of client experience (51%) and expense management (47%).

The analysts have uncovered a lot of paradoxes, particularly in the banks’ answers regarding priorities, strategies, investment, and personnel development.

Contradicting priorities

The banks have named the following priorities for 2020-2021:

- 75% - digital transformation;
- 51% - improvement of client experience;
- 47% - expense management;
- 32% - riskmanagement;
- 30% - growth stimulation;
- 21% - installation of cutting-edge technologies;
- 20% - innovation;
- 18% - increase of the operation quality;
- 8% - development of culture.

At first glimpse, it seems that the first three priorities comply with future requirements of the banking sector. At the same time, the list contains a contradiction: three areas that play key roles in successful digital transformation got low ratings.

While naming their priorities, only21% of respondents named installation of cutting-edge technologies, just 20% name innovation and only 8% named development of culture.However, the attempts to transform banking systems are pointless without a focus on technologies, innovation and culture.

The paradox of success

Although75% of respondents consider digital transformation the main priority, most of them clearly have difficulties with introducing it.

Forinstance, 98% of the banks have said that improvement of client experience is “very important”, “quite important” or “moderately important”, but only 31% fulfilled that task “very or extremely successfully”, while 51% were “general successful”.

With all other strategies of digital transformation (except for the improvement of risk management), it is even worse: only a quarter of the banks recorded success in any key component of digital transformation.

It is also concerning that the lowest success rate is registered in the second most important category – improvement of use of data, analytics and AI. Lessthanoneinfive(17%) banks believes it works with data and analytics “very or extremely successfully”; as a rule, large organizations considered themselves more successful in that area.

It is more worrying that 43% of banks are convinced they work “unsuccessfully or extremely unsuccessfully” with data and analytics.
Finally, lessthan 50% of banks expect to increase the budget for data, analytics and AI.

Inconsistency in digital transformation

Given the described paradoxes, it comes as no surprise that less than 20% of banks consider themselves to be involved in large-scale digital transformation. It should be noted that the index is slightly higher among the largest and the smallest organizations.

Nearly half of banks of all categories except for the smallest ones have said they “partially introduced” digital transformation strategies and the process goes on “as expected”, while 36% of small banks have noted their transformation was progressing “on a piecemeal basis” and brings “satisfactory results”.
Unsurprisingly, none of the large banks have said it has not developed or drafted a digital transformation plan. At the same time, almost one in five (17%) small companies has said it is preparing to draft the strategy or drafting it at the moment.

Previous DigitalBanking studies show that the biggest obstacle to digital transformation is the inherited culture. Realizing the capacities of digital transformation and not supporting initiatives and investments it requires is a failure at the level of the management.

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