It's Just Getting Started: EMEA Is On The Path To Digital Banking

Jerry Silva

With all of the buzz today around digital transformation (DX), it’s easy to see why 75% – 90% of EMEA financial organizations have a digital plan in place to create the future bank.  In fact, a recent IDC survey of 253 banks in EMEA confirms exactly that, almost all banks (96%) acknowledge DX as an initiative in their institution, in one form or another.

And it’s this proviso that’s key to understanding the EMEA market when discussing what it means to be “digital.” Is it really true that nearly every bank in EMEA is on its way to embracing a digital business model, or is it more lip-service?  Looking deeper at the survey data, we get a clearer picture of how banks define DX, and the extent to which it has taken hold:

  • 24% report that DX is an “organization-wide strategy”
  • 44% describe DX as “primarily in the front-office”
  • 20% describe DX as “primarily in the back-office”

To be sure, the use of digital technologies such as cloud, mobile, Big Data and social that are enabling innovative front- or back-office solutions in banking is one way to identify a transformative initiative.  But more important, a key characteristic of DX is “the ability to create an open and agile enterprise capability to respond to changing market conditions and allow the bank to expand its range of business models,” according to the study.

In that context, when asked specifically about the current state of transformation at their institutions – a measure of enablement – 21% of EMEA banks report that their transformation projects, enables the DX strategy and digital customer experience and/or is “aggressively used to disrupt the market with new business models”, while 24% define DX as an organization-wide strategy.  It’s clear that institutions with a top-down commitment to DX are benefitting from substantial improvements in how they respond to, and even disrupt, the industry.

So, if less than a quarter qualify as “digital-ready” based on IDC’s stricter DX definition, what of the remaining three quarters of institutions that have isolated digital projects?  It seems that these banks are on the path to digital transformation, but are lagging in their DX maturity.

  • 52% of all EMEA banks report that DX is a major business priority driven by the CEO and board
  • 44% state that their executives are just at the beginning stages of formulating their future DX strategy.

This points to a relatively recent uptake of DX in EMEA banking – but also show a significant commitment to the overall DX goal.  It’s interesting to note that 72% of EMEA banks said that the lack of a clear enterprise DX strategy was a significant challenge to achieving the organization’s DX goals (second only to a lack of funding as a challenge, reported by 75% of all EMEA banks).  It’s likely that this number will decrease quickly over time as bank executives begin to solidify their digital strategies, nurture a “digital first” culture at the institution, and increase technology investments in the execution of their DX strategy.

Creating a compelling mobile app or new service for a bank’s customers is a non-trivial undertaking that can add to the bank’s value. But creating an organization that is able to “turn on a dime” and respond to the customers’ changing demands, backed by an agile infrastructure and collaborative culture is a game-changer.

How digital is EMEA banking? IDC’s Digital Transformation in Banking Study – sponsored by SAP – shows that the EMEA banking industry is not quite digital-first yet, but the signs are all positive that the path is clear and most banks are at least starting the journey.

Jerry Silva

About Jerry Silva

Jerry Silva is research director for IDC Financial Insights, responsible for the global retail banking practice. Mr. Silva’s research focuses on technology trends and customer expectations and behaviors in retail banking worldwide. He draws upon over 25 years experience in the financial services industry to cover a variety of topics, from the back office, to customer channels, to governance in the technology shops at financial institutions. His work for both institutions and vendors gives Mr. Silva a broad perspective in technology strategies.