77% of Banks Feel Pressure to Collaborate With Fintechs That They View as a Threat to Their Existence

Sopra Banking Software’s Second Annual Digital Banking Experience Report Reveals That While Banks Still Hold 92% of Consumer Accounts, They Can’t Provide Competitive Banking Experiences on Their Own

Sopra Banking Software (SBS), the global fintech company creating a new breed of banks to power financial services in every industry, announced the findings of its second annual Digital Banking Experience (DBX) Report. This year’s report, produced in partnership with Forrester and IPSOS, reveals that even though traditional banks still hold an overwhelming majority of consumer accounts—with 92% of consumers still banking with them—77% of banks feel pressured to collaborate with fintechs and other participants in the financial ecosystem to stay relevant. Many banks (74%) still view these new entrants as a threat to their existence, but feel driven to work with them due to new legislation (66%) and increasingly high consumer expectations that they can’t meet on their own (76%).

“Banks’ lack of digital readiness isn’t necessarily a bad thing; it’s a recognition of the challenges of transformation”

Sopra Banking Software’s Digital Banking Experience (DBX) Report shines a light on how banks’ delayed transformation is creating opportunities for both digital challengers and traditional companies with banking ambitions. It additionally offers an in-depth look at the intersection of banks’ and consumers’ digital banking priorities.

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The report’s findings are based on responses from Forrester’s survey of 792 senior banking leaders, responsible for credit and lending, customer experience, digital banking, open banking initiatives, payments and the technology stack at banks in 50 countries. Sopra Banking Software also partnered with IPSOS to examine how banks are living up to the expectations of 12,500 bank customers in 14 countries, with a secondary focus on responses from 1,000 U.S. respondents.

Among the findings:

• Banks want to transform but don’t believe they have the foundation to do so alone. Thirty-four percent (34%) of banks said that accelerating their shift to digital business is a critical priority. However, nearly half (49%) of banks believe they lack the rounded operating model needed to transform. Specifically, banks identified process and structure and cross-functional, agile working methods and collaboration as foundational pieces of their business they struggle with, and hold them back from digital transformation.
• Banks’ digital shortcomings are creating a gap between them and consumers. While all but 8% of U.S. consumers have an account with a traditional bank, nearly half (46%) have accounts with a digital-only bank. The same number of consumers (46%) would be willing to bank with companies like Amazon, Uber, Apple and Microsoft, while 37% would consider banking with a social media company like Facebook or TikTok.
• Banks believe that the opportunities presented by partnering with fintechs outweigh the threats. Seventy-six percent of banks (76%) acknowledge the opportunity in collaborative business models, citing benefits including revenue growth (78%), improved customer loyalty (77%), reduced time to market (77%) and better customer experience (76%). Another 65% of banks say they prefer to turn to third parties to build new technology, rather than doing so themselves.
• Banks accept a future where they’re invisible, as they consider service-based models that offer new revenue streams. Over half of banks (52%) already offer their capabilities to third parties to enable new revenue streams, and a majority (74%) agree that this ‘as-a-service’ approach will become the leading business model of the future.

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“For the first time in their history, banks are having to adapt their models to prepare for the future,” said Eric Bierry, CEO at Sopra Banking Software. “But in order to do this, they need an understanding of what the financial ecosystem of the future looks like, and then a path to get there. We created the Digital Banking Experience Report to give them that roadmap.”

Sopra Banking Software is part of the Sopra Steria Group, which has been supporting financial institutions since 1968. With the agility of a fintech and the support of a large enterprise, SBS is changing the way that everyday consumers and businesses experience banking and finance.

“Banks’ lack of digital readiness isn’t necessarily a bad thing; it’s a recognition of the challenges of transformation,” said Jacob Morgan, Principal Analyst at Forrester. “Banks realize that it’s time to align their digital goals with those of consumers and third-parties. They’re simply wrestling with the challenges of doing so, and taking time to internalize the changes needed to make this a lasting part of their culture.”

The complete DBX report offers a direct view into how banks are approaching digital transformation, exposing the obstacles that are affecting their ability to meet consumers’ financial expectations.