Corporate banking sector must embrace digital transformation, says new report
Corporate banks must be ripe for digital disruption or face serious threats to their existence, according to a new report from The Boston Consulting Group (BCG).
The BCG suggests that corporate banks the world over need to be prepared to initiate 'front-to-back digital transformations' in order to keep pace in a sector that is rapidly adopting game changing technologies.
A survey of over 200 institutions showed shrinking profits to be prevalent in nearly half of that sample, with that percentage increasing to 57% for banks in Western Europe.
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The BCG recommends a roadmap for digitisation build around four pillars: reinventing the customer journey, discovering the power of data, redefining the operating model and building a digitally-driven organisation.
In BCG’s Corporate Banking Executive Survey, which gauged senior management views on digitisation, a large majority of respondents (86%) said that digital will change both the competitive landscape and the economics of their businesses. However, less than half (43%) stated that they have an explicit digital strategy while only 19% believe that their organisations have market-leading digital capabilities.
"Digital is forcing sweeping changes in corporate banking, and institutions will need to adapt or see their competitiveness and market share steadily spiral down over the next few years," says BCG’s Carsten Baumgärtner. "Now is the time to develop a more coherent digital strategy to decide where to play and how to invest."
"The financial stakes are very high. Over the next five years, we expect 30% of traditional corporate banking revenues to be accessible solely through digital channels."