Last year, an Oracle report, which surveyed over 100 executives at major retail banks, revealed the importance of investing in digital strategies.
94 per cent of respondents surveyed in the Banking is changing…without or without the banks report, said that having a digital omni-channel presence is important for customer retention, however, only 61 per cent said that digitalisation is high on their list of priorities. PYMNTS.com reports that the gap between knowing that digitalisation is important and making it a priority for the organisation may be part of the problem.
The report identified that the competitive nature of the fintech space means that banks are in danger of being left behind. “Retail banks are institutions. Old. Established. Global…And in danger of becoming extinct. Today’s competitive landscape in banking is far removed from what one would have seen just ten years ago,” the report said.
“No longer do retail banks simply vie for customer s against other retail banks. Instead we are witnessing an influx of new, tech-savvy, digital competitors – FinTechs- all eager for a piece of this lucrative financial pie,” the report said.
Despite 33 per cent of executives acknowledging that the future success of their company is “entirely dependant” on digital customer engagement, 88 per cent told Oracle that they see challenges in moving towards digitalisation.
Respondents also noted mobile payments, real-time data, analytics and social media among the key services that are the most important to adopt, however, there was a gap between the 58 per cent of banks that believe customers will want digital synchronisation and the 67 per cent that do not believe the market will be able to deliver those services.
This week, the Economist published a special report all about fintech and said that that while policymakers have been concentrating on making finance safer since the financial crisis and regulators have been pressing banks to comply, the fintech industry has been gaining momentum and according to the report firms are growing fast and are attracting billions of dollars of investment.
“From payments to wealth management, from peer-to-peer lending to crowdfunding, a new generation of start-ups is taking aim at the heart of the industry—and a pot of revenues that Goldman Sachs estimates is worth $4.7 trillion. Like other disrupters from Silicon Valley, “fintech” firms are growing fast. They attracted $12 billion of investment in 2014, up from $4 billion the year before,” the Economist said.
Oracle's report concluded by saying that revelations in the survey such as the market’s apparent inability to deliver digital synchronisation will not stave off the rise of fintechs and predidicted that “the new entrants to the market will parade digitalised customer engagement as a badge of honour, and when they do – just as the banks themselves are predicting – customers will follow.”