Banking's Digital Divide Widens Between The "Tech Titans" and Laggards
Digital laggards will make great take-over targets.
The breakdown of US banks by digital maturity shows the increasing gap between the “digital haves and have-nots.”
Only 19% of US banks fall within the “Tech Titan” category of the most digitally mature banks, and most are large institutions. They have the tech that the other groups in this survey can only dream of and are miles ahead in this tech race.
The gap between the Tech Titans and everyone else is so great that the other categories aren’t even in the competition.
For example, in the next group down, “emerging pioneers,” 36% of banks are still working on the basics like digital account opening. Is opening a digital account really that hard after a decade of going digital?
If that sounds harsh, it is intended to be.
The last two tiers, representing 45% of banks, have been given euphemisms for category names because it’s obvious that the authors can’t call out these banks using the harsh terms they deserve!
The bottom two tiers are called “Cautiously Modernizing” and “Optimistic Believers,” but in more blunt terms, their names should be “Digital Dead” and “Digitally Deluded.”
These two bottom tiers will be takeover targets. It's just a matter of when not if.
👉TAKEAWAYS
Three Pillars of Business Banking Maturity
User Experience Excellence:
This goes beyond feature parity. While most institutions offer similar capabilities, leaders distinguish themselves through superior ease of use, efficiency, and personalization. They’re pioneering automated account creation, implementing sophisticated application programming interface (API) integrations, and delivering intuitive interfaces that simplify complex processes.
Employee Productivity and Experience:
has emerged as a critical differentiator. The most successful institutions are applying the same user-experience principles internally that they’ve historically reserved for customers. They’re investing in automation, democratizing a sophisticated data infrastructure, and actively recruiting talent outside traditional banking channels.
Mindset and Culture:
While the investment in technology, advanced user experiences, and talent are crucial, the institutional mindset will determine whether an organization can effectively deploy these capabilities.
This requires leadership willing to embrace a shift from the status quo and willing to take calculated risks in pursuit of innovation. The outcome is an institutional readiness that transcends where the business is today and prepares for alternative future scenarios.
👊STRAIGHT TALK👊
Report contributor Jim Marous says it best: “What sets the leaders apart isn’t merely their technology stack — it’s their holistic approach to combining culture, strategy, and technology to achieve superior results.”
He is right, and after a decade of digital transformation in banking, that so many banks are so far behind shows a shocking lack of leadership among CEOs.
Most CEOs have failed to promote a digital culture within their institutions where digital tech is promoted and can thrive. For the record, this isn’t just a matter of spending money!
For now, the “Tech Titans” are in the lead, and they are doing a great job of bringing the digital services clients deserve and pay for.
They set the standards for the industry and will use their lead to dominate the industry. Look for them to start buying competitors lower down the tech ladder.
It’s just a matter of time!
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