Report: Digital Banking Accelerates Globally but Lags in North America

Digitization of banking is accelerating around the world, but in North America it is lagging as CEOs prioritize regulatory concerns, according to new research from the Economist Intelligence Unit released at a Temenos banking technology conference in Dublin this week. Fifty-six percent of North American large bank CEOs said regulatory fines and penalties will have a major effect on banking through 2020, compared to just 34 percent who said the same about new technologies such as artificial intelligence and blockchain. In other global regions, 48-54 percent of CEOs labeled new tech as a major influencer on banking.

Meanwhile, bankers globally continue to invest in tech-oriented changes to their business models. More than half said their business model is evolving to become an aggregator of third-party products, that they are opening services to third-party developers and that they are viewing banking as a “digital ecosystem.” However, six in 10 said that they are developing niche propositions for their own customers. Global bank CEOs are making these changes due in part to their majority-held beliefs that customers are willing to forego human banker contact if the services are cheaper or free, that cash will dwindle to 5 percent or less of all global transactions and that retail banking will be at least 80 percent automated.

As banks shift toward digitally oriented business models, seven in 10 are making major investments in cybersecurity, while 54 percent are focusing on individual delivery capabilities, nearly half are moving toward cloud technologies and 37 percent are modernizing their front- and back-office systems. As for concerns, more than half of globally active bankers expressed worry about inconsistent data protection standards, such as how the U.S. market intersects with the European Union’s GDPR.