- Who leads the banking transformation initiatives? This and other questions are part of this report.
- There is a clear trend for multidisciplinary teams focused on innovation and business to lead this activity.
In the fourth Digital Banking Study conducted by consulting firm Infocorp, 80 banking executives from 16 countries in the region shared their views on how they are addressing current challenges.
One of the initial conclusions is that digitization is progressing, but significant challenges remain:
- 65% of banks allow customers to open accounts 100% digitally.
- However, more than 60% cannot offer online cards or loans, highlighting an area for improvement in digital product sales.
- Artificial Intelligence (AI) is beginning to be implemented, especially in customer service and risk management.
However, its full potential has yet to be realized. The report emphasizes that internal culture, technological infrastructure, and budget constraints remain the primary barriers to innovation.
Positive expectations for 2024 include:
- More than 50% of banks plan to increase their investment in technology.
- Additionally, cybersecurity and the expansion of digital channels are priority areas.
- Finally, banks recognize the importance of enhancing user experience to compete with emerging fintechs and neobanks. Although many have already launched initiatives like chatbots and applications, personalization remains an ongoing challenge.
This report underscores the urgent need for a customer-centric strategy, along with technological investments, to stay relevant in an increasingly digital market.
Looking to the future, the vast majority of banks in the region plan to increase their technology investments. According to the report, over 50% of financial institutions intend to raise their IT budgets this year, reflecting a clear commitment to digital transformation. Key investment areas include improving cybersecurity and expanding digital channels.
Competition
One of the most interesting points of the report is the growing competition between traditional banks and fintechs. Fintechs and neobanks are rapidly gaining ground due to their ability to offer faster, more flexible, and customer-centric financial solutions. Traditional banks, in turn, are trying to close this gap by adopting innovative technologies and enhancing user experience.
The study reveals that customers now seek a frictionless banking experience, similar to what fintechs offer. Personalization is an area where banks are still lagging. While many institutions have launched applications and digital tools, most have not achieved a truly user-centered approach.
Perception of leadership in digitalization
Less than 25% of surveyed banks see themselves as leaders, with a majority identifying as early followers. Compared to previous years, there is a plateau in innovation, resulting in banks waiting for the applicability of new technologies.
Who leads innovation initiatives?
39% report having a specific innovation area or multidisciplinary teams formed for this purpose (4% more than the previous year). They are professionalizing by having more robust, dedicated innovation teams. 77% of banks maintain the upward trend in mixed development compared to previous years, hiring third-party companies to drive innovation.
Future of digital banking in 2024
2024 promises to be a year of profound transformation for banking in Latin America. With increasing investments in technology and intensifying competition with fintechs, traditional banks face a pivotal moment. The key to remaining relevant in this environment will be the ability to offer more personalized products, enhance the digital customer experience, and ensure the security of online operations.