Digital Banking's Paradigm Shift

Forrester Research: Bank perspectives

In 2023 banks are regaining confidence. The fears of looming recession that banks and economists had in 2022 did not play out as expected. Banks future readiness is back on track – but the challenge now is to regain consumer trust and undo the damage to the industry of high-profile failures and higher borrowing costs, and from risks with Generative AI. 

Economically most banks remained strong – helped by high interest rates – but suffered from a collapse of confidence in the sector due high profile bank failures and the banking crisis this almost precipitated. 

To help, banks are prioritising financial wellbeing alongside security and customer experience improvement and increasing their focus on resilience and sustainability. 

In May 2023, Sopra Steria commissioned Forrester Consulting to evaluate banks’ strategic focus and future readiness in digital banking. This is the third installment of the annual benchmark study. To explore this topic, Forrester conducted an online survey with 866 senior decision-makers at banks globally with responsibility for credit/lending, customer experience, digital banking, open banking or ecosystem initiatives, payments, and the technology stack. 

We found that sustained pressure on banks to improve and future-proof business models sees banks increasingly collaborating with, or turning to third parties for help, as innovation and technology advances raise consumers’ digital expectations. 

Rebuilding consumer trust and managing risk from artificial intelligence are now added to the list of priorities. 

Key numbers

  • 37%

    Almost 4 in 10 bankers fear AI puts their company at greater risk of successful cyber-attack 

  • 74% Almost three-quarters of bankers view collaborative business models as crucial to future success 

  • 30%  Nearly 1 in 3 bankers worry about the negative impact of AI on jobs in the banking sector

Transformation efforts bearing fruit 

2022’s transformational setbacks appear a blip - banks are progressing again with their future readiness maturity. Confidence increased as high interest rates increased profits and recession fears ebbed – with the number of respondents expecting to be impacted by a severe economic recession dropping from 33% in 2022 to 23% in 2023. 

At the same time transformational efforts bear fruit across all regions and segments – especially with collaborative ventures, both cross-functional, agile working, as well as the readiness to integrate third-party XaaS capabilities. 

Banks continue to keep resilience high on the agenda and are prioritising actions to regain consumer trust. Immediate imperatives include fortifying supply chains to bolster resilience, and building robust, compliant environmental, sustainability, and governance (ESG) practices.  

Simultaneously, banks are responding to increasing consumer concern about their financial health by improving financial well-being services, seizing the opportunity to drive engagement and rebuild trust for their customers. 

Banks continue to rely more heavily on third parties to advance their ecosystems and achieve sustainable growth. This trend is persistent, and banks continue to investment in collaborative and connective capabilities, cementing the importance of platform models. 

Alongside this, continuing to digitize customer engagement, and exploring emerging technologies like generative AI are popular strategies to future proof business models and grow future revenue. 

Key numbers

  • 58% Banks classing themselves among the top three levels of digital maturity – highest ever 
  • 52% Banks viewing AI as offering high- or critical-level revenue streams for the future
  • 64% Banks planning to leverage financial vulnerability analytics to better protect customers 

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