The Three Banks Winning the Digital Transformation Race

Digital banking users are expected to reach 3.6 billion by 2024, marking a 54% increase in four years, according to new research.

A study from Juniper Research found that total digital banking users will exceed 3.6 billion by 2024, up from 2.4 billion in 2020, driven by the rise of digital-only banks and digital transformation projects being enacted by established bank brands.

Bank of America, BBVA and JP Morgan Chase were identified by Juniper’s study as leading the digital transformation drive among “traditional” banks.

The research company’s Digital Transformation Readiness Index put the trio at the top of its rating due to their success in preparing and enacting “digital innovation roadmaps”.

“Banks invested heavily in digital transformation and new offerings in 2019, although the extent of these activities varied considerably,” Juniper said.

Research author Nick Maynard added: “These banks have executed highly effective digital transitions; however digital transformation is never complete. These banks must now refocus on the new strategies required to retain their digital leadership.”

Juniper praised Bank of America’s “extensive digital solutions”, including an online chatbot. The bank has reported “noticeable upticks in digital usage and engagement”, it said. Previous research by Juniper published last year predicted that expanding the use of chatbots powered by artificial intelligence could save banks $7.3 billion by 2023, or 862 million hours.

Meanwhile, JPMorgan Chase is exploring how it can use blockchain to improve its services and “is rumoured to be planning a digital-only launch in the UK”, Juniper said.

Digital-only banks have gained market share from traditional banks by “offering superior user experiences” and specific, focused unique selling points, the research found. More established banks needed to personalise their digital services in order to keep pace with digital-only bank innovation. Juniper said.

Many other traditional banks were exploring the use of digital-only brands in response to customer demand. NatWest in the UK has launched Bó, while Goldman Sachs has Marcus, a digital investment app.

However, Juniper warned that such products and services “must be differentiated from existing offerings and digital-only competition”, including greater personalisation, or they would “fail to gain momentum”.

Separate research published today by consultancy giant EY has also emphasised the importance of digital transformation. Its report found that companies identified as leaders in this area “share common habits that are leading to improved financial performance”.

Juniper’s report — Digital Banking: Banking-as-a-Service, Open Banking and Digital Transformation 2020-2024 — assesses how the introduction of API-based banking, open banking and banking-as-a-service is having a “dramatic effect” on the banking industry and “enabling traditionally non-banking players to make inroads into the banking market”. It is available here.

EY’s report, Tech Horizon: Leadership perspectives on technology and transformation, covers a wide range of industries and is available here.