Across banking and financial services, organisations are transforming their digital services and operations at a faster rate than ever before. But what are the key drivers behind digital transformation in the banking and finance sector? Who is doing it well? And what are the key trends and technologies financial institutions will be focusing on in 2020 and beyond?


Digital transformation in the financial sector is being driven by some key challenges:

In the face of ever-increasing transparency requirements being placed on them by regulations such as MiFID II, financial institutions are having to streamline operations and upgrade their digital solutions to ensure they comply.

Data. Financial institutions are having to collect and store increasing amounts of data. This is pushing developments in data analytics as organisations consider how they can use all this data to their competitive advantage.

Margin pressures
In asset management in particular, demands for operational efficiency and digital transformation are being driven by shrinking profit margins and a need for more cost-effective solutions. There is also a continued move towards outsourcing.

Customer experience
Research published by Boomi in December highlights how important digital experience is to customers of financial products. Boomi’s research found that one in three UK adults consider the search for a better customer experience in digital interactions the main driver for changing banks. Furthermore, one in five UK bank customers would be happy to see branches close in favour of improved digital experiences.

How have leading financial institutions been embracing the transition to a digital-first world?

Barclays mobile banking

Set up in 1690, Barclays is no stranger to embracing change. Boasting 24 million retail customers and one million business clients around the world. Barclays’ digital transformation strategy focuses on integrating their customers’ demands with the growing digitalisation of the retail banking industry.

With smartphone penetration estimated to hit 95% in the UK by 2022, Barclays’ Mobile app is the most used banking app in the UK, with 1.7bn customer interactions from over 7.4m customers. Over 90% of Barclays’ transactions take place over mobile devices. While the app provides standard features such as the ability to transact and transfer money in near-real time, it also offers innovative features including the ability to freeze the debit card in case of theft or loss. The app also allows users to earn cashback and rewards while also tracking recurring payments and bills.

In December 2018, Barclays became the first major bank to allow users to “turn off” payments towards certain types of retailers to give them more control over their spending. The feature is aimed at helping vulnerable customers, particularly those in severe debt or struggling with gambling addictions. Barclays’ bank app was also the first to take advantage of the UK’s Open Banking environment, offering users the ability to view their accounts in 11 other banks, including Natwest, Halifax and HSBC.


In the investment management sector, robo-advisors have begun transforming the way investments are managed. By providing digital financial advice and investment management services based on algorithms that automatically allocate, manage and optimize clients’ assets, investment managers can keep human intervention – and costs – to a minimum.

The large investment houses are increasingly getting involved with Schwab, Fidelity, Merrill, TD Ameritrade and others all offering such solutions.

At the forefront of this movement is low-cost investor Vanguard Group, the world’s largest asset manager. In 2015 it launched its Personal Advisor Services (PAS) combining automated advice with access to a human financial adviser. The programme held $140 billion in assets as of June 2019.

And now the company are believed to be planning the launch of a new, digital-only financial planning and automated investing service which will collect information on things like an investor’s risk tolerance, time horizon, current investments and tax filing status to recommend investments that will help clients achieve their goals at a further reduced cost.

Under Chief Executive Tim Buckley, Vanguard have invested more than $1 billion a year to improve the customer experience and lower funds’ expense ratios, as Buckley explains:

“We continue to bring new talent and technology to our trading desks, which operate around the clock with experts based in the United States, the United Kingdom and Australia. We believe that advice should be delivered with the investor’s interests in mind, whether it comes from a retirement plan, a robo-adviser or a financial adviser.

Digital platforms, including Amazon, Google and Netflix, have changed expectations for what great customer experiences look and feel like. Today, more than 95% of the company’s interactions with clients in the United States are via Vanguard’s website.”

Where next for digital transformation and operational excellence?

What are the main digital trends that financial institutions will be focused on in the future?

Some of the trends likely to emerge are:

1. In-memory processing

Decreasing in-memory costs will drive more analytics to real-time environments alerting financial institutions to sudden changes in financial markets and portfolios.

2. Improvements in natural-language processing

Natural language recognition, interpretation, and mechanics have greatly improved over recent years. Financial institutions such as Bank of America have launched voice-powered AI chatbots and adoption within the financial sector is sure to continue as voice-based applications and analytics continue to improve their ability to capture different voice intonations and accents with accurate natural language recognition.

3. Augmented analytics to fight cyber-crime

On average, UK banks are spending £5bn p/a on combatting financial crime. And with one ten insurance claims fraudulently filed, the world’s leading insurers too are increasingly using artificial intelligence and machine learning algorithms to analyse millions of data points and quickly detect fraudulent transactions that would tend to go unnoticed by humans.

4. Predictive analytics to automate investment decisions

Banks and financial institutions are increasingly using analytical and modelling tools to identify investment trends and automate investment decision-making.

5. Distributed ledger technology

Distributed ledger technology (DLT) has the potential to truly revolutionise capital markets, enabling financial institutions to cut costs while increasing trust, traceability and security.

6. Open source APIs

Financial services firms are waking up to the value of Open Banking initiatives and the fundamental role of APIs. The European Union’s revised Payment Services Directive (PSD2) is one of the most notable acts of regulation that aims at nurturing innovation, competition and data sharing in ways that better serve customers.


Making a Success of Digital Transformation and Operational Excellence in 2020

  • Where does digital transformation currently sit alongside other business priorities?
  • The key technologies companies are focusing on to gain competitive advantage
  • Key factors in successfully delivering transformation projects
  • Examples of companies at the forefront of digital transformation