Banks admit they are trailing in digital maturity, according to a report from financial technology provider Infosys Finacle and industry association Efma.

More than 750 banks and financial services companies from across the world contributed to the Innovation in Retail Banking report.

Only seven per cent of banks say they have deployed digital transformation initiatives at scale “with commensurate benefits”. Further, many banks have shown a dip in their self-perception this year, with only 9 per cent saying they are innovation pioneers, compared to 14 per cent in last year's report.

Scaling digital transformation, improving customer engagement and cost management are the top three priorities going forward for banks, with a focus on agility driven by cloud adoption.

Increased investments in mobility, advanced analytics and Open Banking APIs are areas expected to have the biggest impact on banking over the next 12 months.

While there is an understanding of the importance of digital transformation, most firms rate their efforts as “insufficient”, with 62 per cent stating their digital deployment as “partial” or digital investments “not delivering as expected”.

Respondents said the three biggest challenges for undertaking digital transformation were time and cost of implementation (71 per cent), system integration (66 per cent) and the legacy technology landscape (62 per cent).

Much of the innovation in 2020 was seen as having taken place in lending (40 per cent) and payments (38 per cent). Over 64 per cent identified product delivery channels as an area which would see an “overwhelming preference for innovation” over the next five years

Sanat Rao, chief business officer and global head of Infosys Finacle, said: “The research highlights the only way to balance priorities is to scale digital transformation, across customer engagement, cost management, business model innovation and people empowerment.

“While digitising at speed and scale is the only way for banks to survive, revive and eventually thrive, the study reveals that banks have a long way to go on the implementation front.”

John Berry, chief exeucutive at Efma, said: “Even the most innovative players are now facing strong competition from tech companies and FinTechs, and must continuously innovate to stand out.”

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