Despite growing discussion on the topic, confidence in financial services digital transformation has dropped over the past six years, according to research by Capgemini.

A report by the company has found that fewer financial services executives have confidence that their companies have the digital capabilities to succeed now than in 2012, dropping from 41% to 37%.

Notably, difference aspects of financial services digital transformation attract differences in confidence levels.

Such executives are now more confident in customer experience-related digital capabilities, climbing to 40% from 33%. However, deep drops in other areas have left overall confidence down.

For example, only 33% believe their companies have appropriate digital capabilities in operations, compared to 46% in 2012.

Dropping confidence in leadership over financial services digital transformation

One of the most important aspects of successful digital transformation is leadership, however has seen a significant confidence drop, from 51% to 41% overall.

In some areas this drop has been even more notable, reflecting key issues how prepared companies are for financial services digital transformation.

Confidence in leadership governance dropped from 45% to 32%, while engagement fell from 54% to 33%.

Perhaps most significant is the fall in confidence over IT-business relationships, a field that is arguably vital to digital transformation. This fell from 63% to 35%.

While this is concerning news for the industry, the fact that executives have less confidence than six years ago does suggest that they now better appreciate the challenges that lie ahead.

“This research shows that a reality check has taken place across the financial services industry, as incumbents now understand the true extent of the digital transformation challenge,” said Anirban Bose, Chief Executive Officer of Capgemini’s Financial Services and member of the Group Executive Board.

“In an environment of growing competition and consumer expectation, the view is very different from a few years ago, and it’s unsurprising that large organizations have become more realistic about their capabilities.”

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Roadblocks to digital mastery

In its report, Capgemini assessed how close banks and insurers were to being what it called digital masters – companies that have embraced digital transformation and are successfully adjusting to the changing business world.

“Tomorrow’s operating model is collaborative, innovative and agile,” said Bose.

“The digital masters we looked at are working with an ecosystem of third-party partners, developing and testing ideas more quickly under an MVP model, and nurturing a culture of bottom-up innovation and experimentation.”

However, Capgemini found that only 31% of banks and 27% of insurers had achieved digital master status, while 50% and 56% respectively were found to have barely started the transition, leading them to be classed as beginners.

Given the number of digital-first challengers in this space, and the level of further upheaval on the horizon, this research suggests financial services companies need to take significant steps to avoid long-term business damage.

“This is a wake-up call for banks and insurers to re-examine their business models,” said Bose. “The majority of financial services firms need to learn from the small pool of genuine innovators in their field.”