Retail banks have a $405.3 billion digital opportunity to cash in on from 2015 to 2017, yet, the financial services sector as a whole captured just 29% of that opportunity in 2015, says research released by Cisco.
Digital Value at Stake (VaS) was defined as a measure of financial gain or loss based on two components – entirely new sources of revenue or savings derived from digital investment and innovations, and value shifting among players within industries based on how their respective digital capabilities equip them to steal value from rivals. To calculate Digital Value at Stake, Cisco conducted a comprehensive economic analysis spanning 16 industries in the private sector, financial services being one. The analysis was rooted in customer engagements and evaluation of 350 private sector digital use cases. Thirty of those are focused on financial services.
The study uncovered digital use cases that could drive the fastest value and return on investment for retail banks.
Research indicated that cybersecurity weakness lies at the forefront of challenges slowing growth and innovation in the sector, contributing to retail banks missing out on more than 70 percent of the potential revenue opportunity.
According to the study, the right technology investments such as analytics, mobility, video, and virtualized delivery models, coupled with a plan for navigating security risks, can allow retail banks to create a blueprint for capturing their share of the hundreds of billions in VaS.
The movement toward digital and omnichannel banking by many financial institutions offers both challenges and opportunities. The challenges include identifying the most relevant and promising areas that meet customers’ demands. The opportunities include ways to improve the customer experience, reduce costs, and increase ROI and value through digital-based solutions across channels and lines of business, something that has been met with mixed results by some FIs so far.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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