PHOENIX–The food truck is the ideal metaphor for how the marketplace has evolved, according to one person.
While street food has always been around, the food truck makes the experience mobile, uses social channels to alert people of its location, uses big data/analytics, and accept mobile payments, said James Wester, research director with IDC Financial Insights.
“We have reimagined the restaurant,” Wester told CO-OP’s THINK 18 meeting. “And that’s what digital transformation is doing.”
What is the much-discussed digital transformation, which is sometimes also abbreviated as DX, really about? According to Wester, IDC defines it as the “continuous process by which enterprises adapt to or drive disruptive changes in their customers and markets by leveraging digital competencies to innovate new business models, to blend digital, physical and business and customer experiences, and to improve operational efficiencies and performance.”
Wester showed attendees a slide to illustrate just how much financial institutions are investing in digital transformation in their organizations. Over the past five years there has been a 22.5% average compound annual growth rate in spending on DX by FIs, and Wester forecast that by 2020 institutions be spending 40% on digital transformation, on average.
“Eighty percent of what banks are spending is on what we call boring,” said Wester. “They’re supposed to be boring. Boring payments in financial services is what we offer. When a payment doesn’t go through, that’s exciting. You want the boring stuff. Tech leaders know that as important as that consumer-facing solution is, products have to be built on top of a really stable, secure infrastructure, and that’s where they’re spending.
Two Findings Of Note
As CUToday.info has reported, there are numerous big budget, big name companies seeking to push their way into financial services, including Apple and Amazon. While that is a reason for deep concern, Wester pointed to IDC research among consumers that found 68% believe FIs are more secure than retail stores and other providers.
And while on the topic of technology, Wester pointed to two other findings in the IDC research. In response to the statement, “I will change banks if my bank begins to push out humans in exchange for robots or AI,” 30% completely agreed with that sentiment, while another 30% somewhat agreed.
When consumers were asked about the statement, “I want a deeper relationship with my bank,” 30% said yes, 30% partially agreed, and 46% said they were neutral. “What jumps out here is the 46% who aren’t really sure, and that is up to the FIs themselves to figure this out,” said Wester.