Banking on Digitization
The future of banking is digital. Yet despite the rapidly growing demand for online products and services, many U.S. and European retail banks have struggled to fund the projects necessary to modernize all front- and back-office operations. It’s not just about digitizing loan applications to speed up the approval process. Transitioning from legacy systems at individual bank branches to one digital system spanning the entire organization has proven especially difficult.
Across Europe, banks have digitized only 20 to 40 percent of their processes, focusing mostly on basic customer transactions, according to McKinsey. Ninety percent of European banks invest less than 0.5 percent of annual spending on digital projects.
U.S. banks are even further behind, says Mike Baxter, head, Americas financial services practice, Bain & Co., New York, New York, USA. “Asian banks are the furthest ahead, followed by European banks, and the U.S. banks have been the slowest to adapt,” says Mr. Baxter. He attributes the slow rate of digitization to factors including the recent financial crisis, mergers and acquisitions across the industry, and fears about the cost and
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