Banking industry is the furthest ahead in digital tech adoption

Main visual : Banking industry is the furthest ahead in digital tech adoption

The new survey comes from West Monroe Partners ("Driving Down the Bank Efficiency Ratio: Despite Digital Adoption, Vast Improvements Remain") and it assesses the progress made by the banking sector in terms of the adoption and implementation of digital technology. While progress is benchmarked as good, compared with most other sectors, the report also notes there is a long way to go for the banking sector to reach optimal efficiency (defined as a 50 percent efficiency ratio).

Seeking the 'efficiency ratio'In relation to this, 80 percent of bank executives indicate they have been successful in improving efficiency and/or productivity in the past year. However, only 34 percent report having achieved the target efficiency ratio. This is a key metric, according to Neil Hartman, senior director in West Monroe's Financial Services practice, who states: "The efficiency ratio is the single most important metric for banks seeing to understand the productivity of their organizations and remains the key indicator of progress in the quest to become more efficient."Siloed entitiesThe main reason for the lack of efficiency gains is cultural, which relates to trailing and internal structures which are fostering siloed entities, leading to departments not integrating around a shared vison. The report finds big gains with the adoption of technology, but slower progress when it comes to putting these technologies in place and driving seamless internal and external customer-facing improvements. Changing internal practices also needs to be matched by developing an understanding of the customer journey.READ MORE: Measures to put the digital transformation of banks back on trackBig increase in technological take-upThere are several examples of faster take-up of technology, drawn from the survey of 150 executives across U.S.-based mid-market banks. For example, the report has found that among banks 83 percent of respondents have indicated they are implementing basic technology tools such as cloud computing and software-as-a-service applications. The primary reason for doing so is to seek efficiency gains.Another finding is that 77 percent of banks report they have implemented some form of artificial intelligence and another growth area with is chatbots, where 41 percent of banks report having put in place some form of chatbot.In terms of what banks think will help them to achieve their required efficiency ratio, 61 percent of executives reported that automation technologies were the most implemented efficiency strategy at their institution and 94 percent shared that cloud computing and software-as-a-service technology was the most effective way their institutions are increasing their efficiency. This level of technological adoption needs to be supported by internal reforms designed to reboot cultural practices.

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