Workday shares latest trends in European banking sector

Amsterdam, September 7 – The European banking sector has been ripe for transformation for some time. Changing consumer expectations, disruption by new fintechs and the pressure to reduce costs and operate more efficiently reinforce the importance of digital transformation in this sector. Yet new and persistent challenges still too often impede large-scale digital change.

Workday lists the main obstacles facing the banking industry in their digital transformation – and how they are dealing with them:

  1. Battle for talent intensifies, search turns inward

    Competition for talent has intensified during the pandemic. Banks are not only competing among themselves for in-demand employees such as developers, software engineers and data scientists, but also with technology companies and fintech rivals. Where banks cannot attract new talent, the focus is on retraining existing employees. Many financial institutions are launching ambitious retraining programs to close some of the skills gap.
  2. Greater recognition of the need to modernize the back office 

    Banks see the need for digital transformation, but often seem to forget to align their efforts in that area with broader organizational goals. According to research by Deloitte, there is a lack of “a common, strategic and business-first language for digital transformation across the organization. This can be seen, for example, in the modernization of systems. For example, according to Deloitte, ‘only 11% of banks have modernized systems to the point where emerging digital technologies can be easily integrated’. While huge investments have been made in the front office, the back office still runs on legacy systems and old data models. Global lockdowns have made financial services firms realize the need to digitize the back office and connect processes and data. But there is still much work to be done.
    Hette Mollema, Vice President Benelux at Workday says, “Banks are constantly dealing with changes in regulation and new disruptors entering the market. Then you need a platform for your back office that offers the ability to be agile and scalable. The ability to introduce new measures and add new dimensions with a flexible data model is essential.”

  3. Increasing cyber threat increasingly targets the individual  

    Advanced cyberattacks and outside threats are a high security risk for banks. Yet it is the threat from within that has increased over the past two years. Increasingly, people, not technology infrastructure, are the primary target. An increase in the number of employees working from home is making banks increasingly susceptible to phishing and other fraud methods. This is forcing them to make operational changes. Institutions need to be able to determine if users are who they say they are and behave in ways that match their profiles. With solutions at the intersection of people, processes and technology, banks are addressing the threat with a three-pronged approach: prevention, detection and response and analysis.

  4. Sustainability conquers place in bank’s strategic heart 

    Environment, Social, Governance (ESG) is becoming a central focus for European banks. Almost three-quarters of CEOs at banks believe that future growth will be largely determined by the ability to anticipate the transition to a sustainable economy, according to research by KPMG. However, most struggle to understand what that really means for their bank in the future. In particular, getting insight and data to map out all the potential impacts is proving challenging. To deliver the necessary insights on ESG, banks are increasingly deploying new technologies, such as artificial intelligence and machine learning, as part of cloud-based solutions.

  5. Acceleration gap continues to widen, as does importance of data 

    From the Workday report “Closing the Acceleration Gap: Toward Sustainable Digital Transformation” shows that 55% of executives who recognize the importance of digital transformation nevertheless report that their digital strategy is always or often overtaken by the demands of the business. This “acceleration gap” is growing; the needs of the business are evolving faster than the technology, processes and culture needed to keep up with those needs.”The danger of the acceleration gap also applies to banks and financial institutions,” says Hette Mollema. “The insights they need to make timely and reliable business decisions and accurate forecasting must be able to be gathered faster than ever.” The report shows that many executives are therefore prioritizing data access within their digital transformation approach.