Retail banks have the potential to realise $405.3 billion from 2015 to 2017 as the Digital Value at Stake (VaS), Cisco says in new research.
In contrast, financial services as a whole captured just 29 percent of that opportunity in 2015, according to the “Roadmap to Digital Value in the Retail Banking Industry,” study.
Of the challenges slowing growth and innovation, cybersecurity weakness is certainly at the forefront. Cybersecurity concerns have prevented retail banks from adopting digital technologies and business models. And this has contributed to them missing out on more than 70 per cent of the potential revenue opportunity.
“With the pressing realities of agile ‘fintech’ disruptors, digital consumer demands, and complex regulatory hurdles, the question of how retail banks can compete and capture the revenue opportunity at hand has come to the fore,” says Mike Weston, Vice President, Cisco Middle East.
“As the largest segment of financial services, retail banks play a critical role in any economy. The ability for digital technologies to create and drive new revenue opportunities, combined with the ability to lower operational costs through digitised business processes, brings tremendous opportunity. But, too many banks are moving slowly or not at all. By waiting to digitise their businesses, or by delaying new technology initiatives, banks risk not only missing out on the potential Value at Stake, but are actually at risk for being put out of business altogether.”
The research outlines the Digital Value at Stake for retail banking – as well as a digital roadmap for success. The study reveals digital use cases that drive the fastest value and return on investment for retail banks. With the right technology investments such as analytics, mobility, video, and virtualised delivery models – and with a plan for navigating security risks – retail banks can create a blueprint for capturing their share of the hundreds of billions in Digital Value at Stake.
Despite the tremendous opportunity and competitive pressures that come with digital transformation, retail banks are still slow to digitise.
A recent Cisco study, “Cybersecurity as a Growth Advantage” surveyed 1,014 senior finance and line-of-business executives globally and found that 71 per cent agreed that cybersecurity risks and threats hinder digital innovation in their organisations. Another 39 percent of respondents said they’ve halted mission-critical initiatives due to these concerns.
Sixty per cent admitted their organisations are reluctant to innovate in areas such as digital products and services because of the perceived risks. Specific digital initiatives delayed potentially include omnichannel capabilities, wealth management and asset transfers, mobile banking and mobile payment capabilities, self-service and virtualised delivery models. Cisco’s economic analysis estimates that by not digitising more fully, incumbent retail banks missed out on $144 billion globally from 2011 to 2015.
