Only 12% of banks are ‘digital focused’, finds Accenture
The majority of traditional banks are not investing in digital transformation, with only 12% working towards a digital-first approach, a survey by the Accenture consultancy has found. That is despite clear evidence that this approach improves cost efficiency, Accenture said.
The report, which analysed 161 banks across 21 countries, shows that the 12% of banks which invest in digitalisation have lower cost growth than the other 88%. Between 2011 and 2017, digitally-focused banks were able to cap their cost growth at a CAGR rate of 1.6%. Those which made little digital progress saw annual average compound cost growth of 5.8%.
The top 12% of banks were also the only group with a price-to-book ratio above 1x.
“Investors are signaling that they lack confidence in the future value of the traditional banking business model, with the industry languishing near the bottom on market valuation metrics like price-to-book and price-to-earnings,” said Julian Skan, a senior managing director and global Banking lead in Accenture Strategy.
“Our research shows that digital leadership drives superior economic performance, and that the gap between ‘the best’ and ‘the rest’ is widening at a pace that should concern banks struggling with digital transformation and overall competitiveness.”