Just one in four banks in Europe, the Middle East and Africa has created and executed an end-to-end digital transformation strategy, according to new research.
The study by SAP showed that while 96% of the 250 banks polled had completed some kind of digital transformation initiative, room for improvement remains.
Digital transformation often occurs only in the front office, the study found, creating "islands of innovation" that prevent banks from reaping the benefits at an organisational level.
Chief among these benefits is the ability for banks to reduce costs while still delivering an optimised and individualised experience to customers.
One in five banks surveyed said they currently have a chief digital officer (CDO). IDC believes that one in two will have a CDO or digital leader driving enterprise-wide digital transformation by 2020.
The survey also found a positive correlation between the early involvement of IT and digital transformation success rates – 57% of projects where IT was brought in at the first stages of a digital transformation were deemed successful by the bank respondents.
Four in ten respondents said digital transformation remains a front-office initiative aimed at improving customer experience. And one in five banks said said their digital transformation primarily included infrastructure work.
“There is no doubt that EMEA banks are creating added value for their customers through digital transformation projects, but I envision a brighter future,” said Laurence Leyden, general manager for SAP’s EMEA financial services business. "By blurring the lines between front-office and back-office initiatives and creating a holistic approach to digital transformation, banks can evolve their services with their customers by becoming a lifelong partner.”
The study found that key elements in creating enterprise-wide digital transformation included a collaborative culture and a focus on a digital core that embraced analytics and open, agile technologies.
>See also: How to move beyond digital transformation
Another key element was a willingness to partner with external providers such as FinTech startups, technology providers and nonfinancial services firms that customers value.
Jerry Silva, research director for IDC Financial Insights, added: “For digital transformation to become ingrained in a bank’s DNA and strategy, there needs to be a champion – and that is the chief digital officer.
“The role of the CDO is still new and maturing, but it should be focused on aligning different segments of the organisation and different technology processes around one common goal: greater customer engagement and retention.”