DECEMBER - 20199RIDING THE WAVES OF DIGITAL TRANSFORMATION IN BANKINGthat we can touch today. All incumbents and new players must find a proper way to balance the radical digital transformation, providing a sustainable business in the long term.Looking at the current situation in the banking sector we can see that assets remain overwhelmingly concentrated under the incumbents. Traditional banking activities still account for more than 90 percent of total revenues of financial institutions. Although some of these activities are now performed by non-banks and profits margins are squeezed by low rates. Banks remain dominant in lending and deposit collection, while payments are an area, which continues to attract other players.At the same time, the digital revolution provided by FinTechs and BigTechs is delivering a big value in the "speed" at which they are developing, like new services in line with customer preferences or their ability for hypergrowth and hopping across jurisdictional borders. And, all incumbents should be inspired from the level of efficiency and quality offered by the new players. Moreover, the regulators push toward "Open Banking" is raising the concept of banking-as-a-service (BaaS), with the traditional banks increasingly allowing third-party providers and FinTechs to leverage their infrastructure and customer data to develop new digital services. However, "Open Banking" is only a reality in some countries and is still in an early phase, soon the countries around the world will follow suit. The most innovative banks are already taking advantage of this technology, and other incumbent players are realizing the need to adopt more digital services and offerings to stay competitive in the industry.Incumbents should pursue the goals of their digital transformation efforts, the top ones being improvement of the customer experience, accelerating the delivery of digital products and services, remaining competitive in the current marketplace, implementing more efficient business models, reducing costs and increasing revenue. But such fundamental changes require a significant change in the organisation. Banks should define the ownership of both digital transformation and innovation, moving up the organizational hierarchy, with cross-functional teams being leveraged to break down legacy silo perspectives.We can observe that many incumbents are attempting to deliver digital transformation by investing in individual technologies. While it is important, an investment in these technologies alone does not guarantee the achievement of digital transformation. Adopting technology cannot be translated as "Digital Transformation".Banks have to undertake a full set of strategic decisions and measures to prepare for such transformation, and the game is just about to start. BCBanks have to undertake a full set of strategic decisions and measures to prepare for such transformation and the game is just about to start
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