Why successful innovators are worth their weight in gold: the top five reasons why digital transformation in banks fails

Date: 1 June 2021
Author: Susanne Chishti, Founder & CEO, FINTECH Circle

This post originally appeared in the Business Reporter.

Over the past five years, the fintech market has continued to thrive. Even during the Corona pandemic in 2020 and 2021 so far the Fintech sector has proved very resilient. Over this period, we have seen many more corporates and corporate venture capital funds participate in ever-increasing funding rounds for fintech scale-ups as fintech is seen as part of the solution to rebuild our global economy post the Covid19 recession.

However, most leadership teams in banking are concerned about the changing competitive environment across financial services. Digital transformation is a frequent agenda item in board meetings, as the market has shown how much more it values digital companies than traditional banks.

According to BCG, personalisation can boost product sales by 30 to 40 per cent in some retail banking areas, and cut customer churn by 10 to 30 per cent while at the same time doubling or even tripling customer engagement scores. So being digital clearly has a strong bottom-line impact.

It’s not a surprise, therefore, that all banks go through digital transformation programmes. But what is surprising is that the majority of them fail. McKinsey research showed that 70 per cent of complex, large-scale change programmes do not reach their stated goals.

Michael Wade, Professor of Innovation and Strategy at IMD Business School, went even further and found that 95 per cent of digital transformation programmes fail, due to inflexible company structures and culture. He found that the biggest barriers to innovation are rigid business silos and the resulting non-collaborative culture.

So what are the top five reasons digital transformation programmes fail?

Find out in the Business Reporter article!