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Product agility a key concern in retail banking strategy, report says

May 25, 2018

More than half (61 percent) of retail bank executives are developing niche propositions for their digital strategies, according to a new report by banking software provider Temenos.

In fact, banks are now more focused on tech trends than regulatory compliance, according to the report, Whose customer are you? The reality of digital banking.

This fifth annual report investigates the strategic concerns of retail banking executives, and underscores the need for stakeholders to co-operate in order to deliver the user experience customers want while maintaining the security they demand for their money and personal data.

Among the key findings:

• More than three-quarters (78 percent) of respondents believe that platformization of banking will steer the market.
• For the first time in the survey's 5-year history, technology and digital are bigger trends than regulation.
• More than half (52 percent) of survey respondents say that product agility is now their top strategic priority.
• Nearly three-quarters (71 percent) of respondents are focusing their digital investment on cybersecurity, up from 34 percent last year.
• AI is becoming a key part of the new technology mix, but only about 20 percent of respondents think it will improve the user experience.
• Banks can take on fintechs by building seamless platforms for products and services. Investments are being directed to digital channel delivery capabilities such as mobile (cited by 54 percent of respondents), cloud-based technologies (48 percent), and modernizing front- and back-end systems (37 percent).
• More than 61 percent of respondents still see a place for the traditional transaction-based branch model, nearly twice as many as those who think it will be dead by 2020.

"Banking has reached a watershed moment with changing customer behaviors, disruptive new technologies and a dramatic increase in competitors from within and outside of banking," Temenos CEO David Arnott said in the release. "IT renovation is key to banks’ strategy ­— and, indeed, their very existence — as they will need to redefine their business models in the new API economy."

Read more about the findings.

The Economist Intelligence Unit surveyed 400 global banking C-suite and board level executives about the challenges retail banks expect to face between now and 2020, and the strategies they are deploying in response. Respondents came from Europe (25 percent); Asia-Pacific (25 percent); North America (18 percent); Latin America (16 percent); and Africa and the Middle East (16 percent). Additionally, in-depth interviews were conducted with 20 senior executives from banks, fintechs and security advisers.