Banking Industry Is Easiest Prey for Tech Disruptors: Survey

Digital transformation is going to disrupt credit unions and other financial institutions more than in any other industry, leaving them vulnerable to lagging productivity, higher costs, less satisfied customers and less intelligent decisions, according to a new survey by technology market research firm Dimensional Research and San Mateo, Calif.-based software company Alfresco.

The survey of 307 U.S. and UK-based IT professionals found that 40% of the respondents believed the banking industry was the one most likely to suffer by failing to digitally transform.

“There is a general perception among decision-makers that certain industries will lead this transformation while others will be left at the rear,” the study said.

“One speculation about this trend is that industries, such as banking, are frequently relying on more legacy applications and outmoded processes to run their business. As such, they are unable to make changes quickly compared to others who don’t need to bring old technologies along with their digital transformation,” it explained.

Technical difficulties

Among the IT leaders in the survey, the most commonly predicted benefits of digital transformation were improved employee productivity (74%), followed by efficiency-driven cost savings (71%), higher customer satisfaction and loyalty (62%), better decisions due to data-driven insights (59%), competitive advantages (57%) and more revenue (52%).

Credit unions and other financial institutions aren’t the only ones under pressure to capitalize on the benefits of getting with the digital times, however. Retail, healthcare, government and airlines were next on the list of industries most at risk from disruption by more technically innovative competitors, followed by manufacturing, insurance, automotive, transportation and hospitality.

“With the reality of nimble innovators entering the marketplace who may be more adept at embracing digital technologies, most companies are feeling the heat. An overwhelming 87% of digital transformation decision-makers say their company’s business results would be impacted if this type of competitor appeared,” Dimensional Research and Alfresco noted.

Eat or be eaten

Not every credit union or financial institution may see the disruption coming, however. According to the survey, 50% of the respondents in the financial services and insurance sector thought their companies were more likely to disrupt their competitors; the other half predicted that their companies would be the victims of disruption from competitors.

Ultimately, the choice is either be a disruptor or be the disrupted, according to the study.

Vision, execution and new technology adoption were the most common reasons IT leaders believed their companies would be the disruptors; however, lack of investment, lack of leadership vision and lack of willingness to embrace digital transformation were the most common reasons they believed their companies would be the disrupted, according to the report.

“IT typically thinks the business is the bottleneck in digital transformation. Among IT stakeholders, 70% believe their business execs are taking too long to make the digital transformation leap compared to only 38% of those who say the technology team is holding them back,” the study added.

In any case, the technology itself isn’t the hardest thing that executives at credits unions and other organizations have to manage during a digital-transformation process — 78% of the respondents said the accompanying people changes, including culture and organization, are more difficult, according to the survey.