The FINANCIAL -- Nearly four-fifths (79 percent) of operations leaders at North American banks believe that their bank’s existence will be threatened if they don’t update their technology to innovate faster and more efficiently, according to new research by Accenture.
According to the Accenture report, “Back Office, It’s Time to Meet the Customers,” which is based on a survey of 80 bank operations leaders in North America, banks recognize that to compete successfully in today’s digital age, they must provide the kind of superior experience consumers have come to expect from large tech and fintech companies.
Banks have for many years been prioritizing their investment in technology to enhance operational efficiency. However, three-quarters (74 percent) of the bank operations leaders surveyed said that improving the customer experience is currently their top strategic priority. More than two-thirds (69 percent) of the respondents believe that their operations hold trapped value — customer data that could be used for innovative new products, services and processes — that is not currently being leveraged.
“There’s a wealth of unlocked value to be extracted from banks’ operational systems, but releasing and optimizing that value depends on the bank’s ability to use digital technologies,” said Alan McIntyre, a senior managing director at Accenture and head of its Banking practice. “The challenge lies in the banks’ legacy systems, which can impede a bank’s ability to improve operations and prepare for the future.”
While bank operations leaders understand the importance of digital transformation, implementing the technologies required to achieve that transformation is a major challenge. When asked to identify the greatest barrier to their bank’s ability to drive digital transformation, respondents most often cited their complex legacy IT environment (cited by 38 percent of respondents), with the cost of modernizing those systems the most significant obstacle to adopting new technologies, cited by 39 percent of respondents.
“Banks can focus on the customer experience by combining key technologies that they can implement today, without a major overhaul of their existing IT infrastructure,” McIntyre said. “For instance, by using cloud, robotic process automation and artificial intelligence, banks can plug-and-play new customer-facing apps and processes within or around their existing legacy systems. We believe that this approach can, through revenue and productivity gains, increase a bank’s return on equity by as much as seven percentage points.”
The report notes that banks are embracing cloud, artificial intelligence and other digital technologies to upgrade their operations. Nearly half (48 percent) of survey respondents said they already use cloud-based applications, with another 27 percent planning to do so in the next year; 22 percent said they are using artificial intelligence, with another one-third (33 percent) planning to do so in the next year; and 16 percent said they use robotic process automation, with another one-third (33 percent) planning to so in the next year.
This adoption of new technologies underscores the shift in the role that banks’ operations organizations will play. Almost half (45 percent) of respondents said they foresee banking operations’ primary role in three years as achieving straight-through processing through digital technologies and fully harnessing the potential of customer and transaction data residing in operational systems.