Digital technologies such as data analysis, mobility, video communication and virtualised operating models, bring new market potential to the financial sector. A new study by Cisco entitled Roadmap to Value in the Digital Retail Industry Bank estimates the potential as $405 billion for the years 2015-2017. Last year, however, banks were able to use less than a third of the available potential. The main reason was their concern about the security of new digital banking solutions.
Concerns about cyber security are the most serious obstacle preventing retail banks from introducing new digital technologies such as video-based advisors, workforce transformation, mobile payments, virtual tellers, information-based consulting, white-label services, connected ads, marketing, and others. Retail banks are also facing increasing pressure from agile “fintech” disruptors, digital consumer demands, and complex regulatory hurdles.
“Fintech” startups are disrupting retail banks by unbundling their products and services. By doing this, they are able to seize a share of the banks’ most profitable business while avoiding the barriers to entry that naturally come with being a full-service bank. These start-ups are digitising their offerings. Retail banks that fail to drive their digital transformation may be put out of business completely.
No future without digitisation
According to a 2015 study by the Global Center for Digital Business Transformation (DBT Center), an IMD Business School and Cisco initiative, four out of the top 10 retail banks will be displaced by digital disruption in the next three years.
"Czech banks are doing similarly to financial institutions elsewhere in the world. They are hesitant to implement innovations using the possibilities of the digital economy. This is due to the traditional and somewhat rigid atmosphere of classic banks and their reluctance to embark upon new and untested solutions adequately. That is how they lose, for example, the possibility to address the young generation more or use Wi-Fi analytics to contact potential customers," says Michal Stachník, CEO of Cisco Czech Republic. "When some of them start introducing new technologies aimed at ordinary customers, they choose rather faster solutions and cheaper technologies. Unfortunately, it often leads to the fact that they deal with security, which is crucial for any digital technology, later, non-conceptually and with higher costs."
The entire study (in English) in available here.
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