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European insurers and banks are facing pressure from many sources: customer expectations are high, while market share, investment returns, stock prices and customer loyalty are low. Becoming a digital business can help ease this pressure.
The Accenture European Financial Service Digital Readiness study examined 27 insurers and 26 banks headquartered in France, Germany, Italy, Spain, and the United Kingdom. It found that European financial services firms are losing ground to digital innovators, which are more effective at integrating digital into all aspects of their organizations.
The research ranked companies across four areas (strategy, production & delivery, the customer experience, corporate culture and operations) on a scale of 1 to 4. European banks and insurance firms scored, on average, 2.35 on the scale, while digital disruptors such as Google and Salesforce performed better with an average score of 3.5 out of 4.
Banks and insurers in Europe’s top five markets are exposed to similar key trends when it comes to building digital into their businesses. Across the region, firms tend to do best in the areas of strategic thinking and in customer-facing initiatives. Bringing digital into product development processes and operations remains a challenge.
According to the research, an overwhelming majority (89 percent) of the banks and insurers have an interest in developing digital products.
Eighty-one percent of the firms highlighted their work with start-ups and universities on digital topics.
But, the study found that only 60 percent have open innovation initiatives or use digital technologies for product development.
To close this gap in product development, they need to bring digital into every aspect of the process:
- Design innovative products via digital technologies or approaches (open innovation)
- Build products and services with the aid of digital technology
- Run streamlined activities by using digital solutions like cloud, mobility, and analytics
The days of the local insurance agent’s office in the heart of the business district, and of the local bank as a hub of family and business activity, are long gone. Consumers expect big banks and international insurers to meet their financial services needs, wherever and whenever those needs occur. Now, new entrants are already building financial transactions seamlessly into rich digital experiences, taking banks and insurers out of the loop and out of customers’ sight. With the EU’s upcoming revised Payment Services Directive (PSD2), fintechs will get access to traditional firms’ customer data and individual customer accounts, making it even easier for banks and insurance companies to be relegated to processing transactions. For that reason alone, it is time for financial services organizations to stop thinking about digital and start executing.
To learn more, register to download the report: European Financial Services Digital Readiness Report.