Banks worldwide spend US1 trillion on digital but few benefit study finds

first_img Comment Sponsored By: Email More June 21, 20192:16 PM EDT Filed under News FP Street 0 Comments Featured Stories Elizabeth Rembert Recommended For YouMarkets mostly recover from deep losses on Trump tweet about ChinaYields little changed by jump in U.S. consumer pricesPosthaste: The unsinkable Canadian dollar, Brexit risk rising and CannTrust’s stock meltdownTrans Mountain construction work can go ahead as National Energy Board re-validates permitsDavid Rosenberg: Deflation is still the No. 1 threat to global economic stability — and central banks know it Facebook Share this storyBanks worldwide spend US$1 trillion on digital, but few benefit, study finds Tumblr Pinterest Google+ LinkedIn Bloomberg News Twitter While global banks have been pouring money into information technology — to the tune of US$1 trillion over three years — only a handful appear to be fully committed to a digital transformation and are therefore reaping the benefits, according to an Accenture Plc study.Just 19 banks among the 161 largest retail and commercial banks that the consulting firm examined have been focusing enough on digital strategies to “make the shift to a different sort of bank,” Accenture said in the report, released Thursday. And those that did were rewarded for their efforts, the firm said.All the banks studied, based in 21 countries, started at roughly similar rates of return on equity in 2011, but by 2017 the banks that Accenture identified as “digital focused” had ROE that rose 0.9 percentage points. The 81 least-digitally focused banks, meanwhile, saw their ROE slip 1.1 percentage points — and Accenture researchers said the gap is likely to continue to widen through 2021. ROE at a middle group of 61 “digital active” banks was little changed. Big tech moving further into big bank turf with crypto, credit card offerings Manulife Bank out to poach millennials from the Big Five with targeted digital banking packages Greg Feller: Canadian banks are about to have their Apple moment “You could see in those three groups the performance deferential,” said Alan McIntyre, an Accenture senior managing director and co-author of the report. “You see a gap, and where the gap is coming from, and it’s coming from digital.”The US$1 trillion estimate by Accenture is for retail and commercial banks globally, and includes all internal and external hardware, software, service and information-technology staff costs. The most digitally focused banks became more profitable through cost-cutting, Accenture researchers said, and Wall Street has rewarded them with higher valuations. While the study didn’t include names of the banks studied, McIntyre said that the 19 most digitally focused banks include JPMorgan Chase & Co.Related Stories:Exit of Deutsche Bank’s investment bank chief marks end of eraNew York-based JPMorgan, the largest U.S. bank, has been a top spender among financial firms in the technology arms race. In February, it said it planned to boost its tech budget by US$600 million to US$11.4 billion this year.Bloomberg.com ← Previous Next → Join the conversation → Reddit Banks worldwide spend US$1 trillion on digital, but few benefit, study finds Of banks in 21 countries, just over 10 per cent of the largest are now ‘a different sort of bank.’ They have had the better returns JPMorgan Chase, the largest U.S. bank, has been a top spender among financial firms in the technology race.Getty file photo What you need to know about passing the family cottage to the next generation advertisementlast_img read more