A recent survey by financial services consulting company, iBe, shows that digital disruption is putting pressure on existing business models within the banking sector.
The State of Digital Innovation report, which was derived from research conducted on 42 CEO’s and CIO’s across a variety of sectors in August 2014 and February 2015, alongside 100 senior executives in November 2014, shows that digital innovation and the high number of fintech start-ups entering the market is not only impacting the way people handle their finances, but is also putting pressure on financial service providers to enhance customer experiences.
Phil Falato, head of Digital Transformation at iBe said: “Digital innovation is transforming the way people interact, transact, educate themselves and even handle their finances. Businesses find themselves in a situation where the customer is in control and directing and designing their own customised experience. This new wave of behaviour is ushering in the next generation of consumers and companies need to respond quickly or risk losing out to new players.”
The Confederation of British Industry estimates that FinTech will be worth £300bn to the UK economy by 2020, and CIO’s are under extreme pressure to provide cutting edge, tailored customer journeys. The report said that nearly half of innovation efforts across the sectors surveyed are focused on enriching the customer experience which shows the shift towards away from a product-centric business model.
“The new generation of customers only care about three things; convenience, simplicity and speed. To achieve this, businesses need to make sure customers have 24/7 access to services, respond to any queries in real time and interact with their customers to build a meaningful dialogue. Interpreting data cleverly will help companies predict behaviours and ultimately sell more products and services” said Francesco Scarnera, CEO at iBe.
The survey results also showed that mobility and data analytics continue to be the most popular disruptive forces with 45 per cent of respondents identifying mobile as having the most disruptive effect on their business. Thirty nine per cent of respondents said they are applying disruptive innovative forces to new areas of the business and although customer centricity was recognised as fundamental to innovation, 21 per cent of respondents said that legacy and governance structures are a hindrance to digital transformation.
The survey found that despite recognising the importance of driving innovation, only 16 per cent of companies have a formal process in place to drive innovation. The report also suggests that effective digital organisations foster a culture of innovation across the business, collaborate with customers, and learn through experimentation. Successful organisations also recognise that innovation can be learnt from smaller, smarter, disruptive players.
However, according to Roger Camrass, pioneer of today’s Internet and Professor at Surrey University, some companies are getting it wrong by only focusing on implementing new technology and not concentrating on driving cultural changes to benefit their customers. “We found that major companies mistakenly assume that they are being digitally disruptive and innovative when implementing new technology portfolios or using tools such as mobile, social networking, predictive analytics and cloud. Using new technology does not automatically result in digital disruption. You need to drive a cultural change and identify the right partners to help you achieve the right solution for consumers living in a digital world.”