Digitization of Financial Services: Doing Things Right is Better Than Doing It All

Although the value of fraudulent activities in online banking is expected to reach $7 billion by 2020, the focus on digital channels in banking has been only increasing as banks are facing competition from challengers and are looking to cut costs of physical infrastructure maintenance.

DBS estimates that financial institutions that are not able to adopt a digital model may see a drop in ROE by ~18% over a five-year timeframe. However, retail banks that are able to reinvent themselves could see a substantial increase in ROE, around 18%, largely driven by the lower cost of serving customers and the efficiencies they will reap.

To meet customers' digital wants and needs – and to save money – many banks are aggressively expanding digital channels. But so far, this is not going smoothly; customers are not abandoning physical channels. Although banks are offering more channels, they are not realizing desired outcomes such as reduced costs and higher customer engagement, experts from Gallup note.

Recognition of changing consumer behavior and preferences led financial institutions to the development of pract ...

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