Financial firms 'must move beyond digital strategy and into implementation', says consultancy

The consultancy firm analysed publically available information about the extent of digital transformation at 53 major banks and insurers in France, Germany, Italy, Spain and the UK. It said that there is a gap between the number of firms that recognise the importance of digital technologies and the number of firms taking action to integrate those technologies into their organisation.

"To stay relevant with customers, investors and shareholders, financial services firms must move beyond digital strategy and into implementation," Accenture said in its report (16-page / 5.07MB PDF). "Becoming part of the digital experience – with one-tap quotes and two-tap loans or coverage – is one way to stay close to customers. But the customer is just one part of the equation. Financial firms must also digitalise their operations, from automating processes to improving current performance with digital tools and analytics."

According to Accenture, 86% of the financial firms include digital as part of their company strategies but just 37% have a specific budget for digital transformation. Of the 53 major firms analysed 63% have a chief digital officer, it said.

The study also revealed that whilst 81% of the firms have highlighted collaborations on digital projects with start-ups and universities, fewer than 60% "have open innovation initiatives or use digital technologies in their product development process", Accenture said.

IT contracts specialist Tim Roughton of Pinsent Masons, the law firm behind Out-Law.com, said that the findings from Accenture's study are consistent with what he is seeing in the financial services sector. 

"Digital technologies are driving innovation and causing disruption for financial services organisations," Roughton said. "In response, many such organisations have a digital strategy but the implementation of that strategy is not straightforward. A major hurdle for organisations is the transformation from legacy IT infrastructure to a new digital platform." 

"One question firms must ask is whether digital solutions can be bolted on to existing infrastructure or whether they need built from scratch. In addition, new agile IT platforms increasingly rely on cloud technology but there are a number of regulatory and security barriers to be overcome for financial services organisations. The digital landscape is also more fragmented which leads to a more complex supply chain and the need to contract with an increasing number of SMEs – which brings with it a different, more challenging risk profile," he said.

Fellow expert in IT contracts Clare Murray of Pinsent Masons said: "Businesses are under huge pressure to change and to access and exploit new technologies to enable this. However, organisations are being constrained by the limits of legacy technology, systems and customers; investment costs; regulation and the broader challenges of effecting business change. One of the challenges facing long established business like major global banks is that they have a vast and diverse customer base requiring multiple forms of communications and access – the new challenger/disrupters can secure swift success with simple online solutions for 'digital natives', an ever growing population."

Murray said that there are examples of "two-speed IT" in the market, where businesses dedicate resources to deliver urgent digital projects while at the same time other parts of the IT team continues business as usual operations. She said that many organisations now realise that this approach "will only take them so far".

"An effective business strategy must be an effective digital strategy," Murray said.

Massimo Proverbio, senior manager director of banking at Accenture in Europe, Africa and Latin America said that European financial firms' approach to integrating digital technologies is often not structured or part of a "holistic action plan to capture value from the digital market".