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Digital ecosystems are the holy grail of financial services industry

Eight out of ten financial service companies are directing their investments for the next 12 months towards developing digital ecosystems and marketplaces. Most financial service players expect an acceleration in the shift to digital customer services. Banks and insurance companies are all making efforts to apply digital techniques to improve their products and services and enhance customer experience. However, not all companies are at the same stage of digital transformation. Some companies are ahead of the curve, taking full advantage of digital innovation to build digital ecosystems and develop new business models. These trends are confirmed by a commissioned study conducted by Forrester Consulting on behalf of TrustBuilder in March 2021.

The study was conducted online by Forrester Consulting among decision-makers in the financial services industry (retail banks, insurance, digital banks) in 11, mainly European, countries. In all, 312 decision-makers participated.

Banking customers are moving to digital channels

The survey confirms that financial service companies are already noticing a significant increase in the use of their digital channels. 4 out of 10 financial service companies say that over 50% of customers are using digital channels to access their services. And that number is only set to increase. Only 9% of financial service companies expect less than 30% of their customers to move to digital. Based on the acceleration of digital, most financial service companies are increasing their IT budgets, mainly to invest in improving their digital products and services and improving customer experience. A significant portion of respondents (68%) also see launching new business models for new revenue streams as a high or critical priority.

Although all financial service companies are undertaking a digital transformation, the speed of implementation differs from one company to the next and from one sub-segment to another. Some companies are clearly ahead of the curve, by adopting marketplace thinking and building digital ecosystems that also include non-financial services. Companies that think about developing digital ecosystems expect revenue growth, customer loyalty and customer satisfaction. Hurdles to building digital ecosystems are security, legacy technology and customer data.

To support their digital and mobile initiatives, companies expect to invest in fraud detection software, mobile app developers, authentication software and IAM. The survey reveals that companies that are ahead of the curve set different priorities and have a different technology spending pattern.

TrustBuilder Maturity Model

Based on the results from this survey, TrustBuilder refined its maturity model for IAM. This maturity model demonstrates how companies progress in their digital transformation. From focusing on digitizing products, they move up the value chain to developing and monetizing new business models. TrustBuilder groups companies together in five stages of maturity:

  • Digital Developers make their financial services available online and on mobile devices.
  • Experience Experts focus on customer experience improvements, such as passwordless multifactor authentication, adaptive security, …
  • Connected Companies connect to the outside world, embrace open banking and let users bring their own authentication.
  • Ecosystem Extenders offer more content by including 3rd party services alongside their own services, thus increasing brand loyalty, customer engagement and customer satisfaction.
  • Monetizing Masters launch new business models based on their digital ecosystems, generating new revenues streams.

TrustBuilder offers software and consultancy that help companies in every stage of the maturity model, effectively enabling and accelerating financial service companies’ digital transformation.

An extensive report of the survey is available as a download from the TrustBuilder website. You can also rewatch our webinar with Forrester Senior Analyst Jacob Morgan.