Sopra Banking Software (SBS), a global FinTech company, has released its second annual Digital Banking Experience (DBX) Report.
What they found was that there is trouble brewing in banking paradise.
What the report numbers show
The report, produced in partnership with Forrester and IPSOS, revealed that while traditional banks still hold the majority of consumer accounts, with 92% of consumers still banking with them, 77% of banks feel pressured to collaborate with fintechs and other participants in the financial ecosystem to stay relevant.
Many banks (74%) still view these new entrants as a threat to their existence but feel driven to work with them due to new legislation (66%) and increasingly high consumer expectations that they can’t meet on their own (76%).
The report found that banks want to transform but don’t believe they have the foundation to do so alone. 34% of banks said that accelerating their shift to digital business is a critical priority, but 49% of banks believe they lack the rounded operating model needed to transform.
Banks identified the following as foundational pieces of their business they are struggling with, and holding them back from digital transformation:
- process and structure,
- agile working methods,
Mind the gap
Banks’ digital shortcomings are also creating a gap between them and consumers. While all but 8% of U.S. consumers have an account with a traditional bank, nearly half (46%) have accounts with a digital-only bank.
The same number of consumers (46%) would be willing to bank with companies like Amazon, Uber, Apple, and Microsoft, while 37% would consider banking with a social media company like Facebook or TikTok.
The report found that banks believe that the opportunities presented by partnering with fintechs outweigh the threats.
76% of banks acknowledge the opportunity in collaborative business models, citing benefits including revenue growth (78%), improved customer loyalty (77%), reduced time to market (77%), and better customer experience (76%). Another 65% of banks say they prefer to turn to third parties to build new technology, rather than doing so themselves.
This insightful report highlights that banks are recognizing the need to adapt their models to prepare for the future and are looking to fintechs and other participants in the financial ecosystem to help them stay relevant.