Build Strategy for Banking Platforms Resulted in 70% of Failed Digital Transformation for Banks in APAC

" This in-depth report draws insights from 125 banks and 316 CIOs in APAC, offering a regional perspective on digital transformation. The IDC InfoBrief challenges the long-standing default approach of building in-house solutions for digital engagement banking platforms, and finds that 65% of mid to large sized banks in APAC have opted to build their engagement banking platforms in-house to achieve digital transformation, however, 70% of these projects have failed due to costly and lengthy in-house efforts.

From the IDC InfoBrief, a staggering 80% of digital engagement platforms built in-house with budgets over USD10M face underperformance and have not yielded the desired ROE in their digital initiatives.

“Building in-house has been a de-facto strategy by banks, but it’s no longer feasible to deliver to the pace and scale that is required to be competitive. The complexities that come with the extensive amount of data layers, channels, features, upstream and downstream integration that needs to support legacy and modern systems to manage and orchestrate sophisticatedly is where in-house implementation breaks apart,” said Ashish Kakar, Research Director, Financial Insights, IDC Asia/Pacific.

The Shortfalls in Digital Experiences

Despite having embarked on digital transformation since the 2000s, many banks in APAC remain at an early stage, failing to fully capitalize on its benefits and deliver compelling digital customer engagements.

The IDC InfoBrief highlights a crucial disconnect between banks and their customers, where most banking products and offerings are deemed "me-too" and limited. Customers face challenges accessing multiple services through disparate interfaces, lack a unified view of their portfolios, and endure lengthy onboarding processes. The demand for instantaneous approvals and streamlined digital processes remains unmet, while personalized experiences, segmentation, and relevant promotions based on customers' lifestyles, life moments, and goals continue to elude them. Additionally, backend operations suffer due to the lack of intelligent assistance in contact centers, leaving customers repeating information to different service officers due to the absence of a 360 degree unified customer view. This is a result of banks focusing on locking in a high amount of resources getting banking platforms into shape instead of prioritizing the creation of differentiated upstream customer journeys and experience.

“Over 150 modern and forward-looking banks have adopted and built on top of Backbase’s Engagement Banking Platform to accelerate their go-to-market visions and prioritize innovative, differentiated digital customer engagement and experiences. In APAC, you see large to mid-sized banks like Techcombank, BDO, HDFC, ABBANK, OCB, and more already on the Engagement Banking Platform bandwagon”, said Riddhi Dutta, Regional Vice President, Asia of Backbase.

“ A true platform comes with all the hygiene requirements from market fit, to security and regulatory compliance, to being versatile and customizable to support each bank’s unique customer needs. The platform is a composable fabric providing modularity and re-usable data and journeys for banks to help banks futureproof at scale,” Dutta further explained.

A Shift in Mindset: Embracing "Adopt and Build" for Accelerated Growth

The analysis in the IDC InfoBrief finds the “Adopt and Build” approach a pragmatic solution for banks to accelerate their go-to-market efforts, differentiating where it matters instead of reinventing the wheel by building from scratch. By adopting a collaborative platform and building upon it, banks can achieve 40% faster time-to-market, where digital engagement banking platforms can be launched within 11 months, as compared to the traditional 20 months with a full "build" approach. In addition, “Adopt and Build" had proven to be 2.3 times more cost-effective than the traditional in-house "build" option.

Across six key metrics—market fit and differentiation, legacy risk, build risk, time to market, modernize talent & IT skill set, and regulatory compliance, the “Adopt and Build” approach was rated highest and had shown tangible advantages in comparison to the “Build” and “Buy” approaches.

This IDC InfoBrief is the first of two consultative guides commissioned by Backbase to provide pragmatic guidance for banks to evaluate a more effective platform strategy that can drive accelerated and differentiated digital customer engagement.

To download the IDC InfoBrief, "Accelerating Customer-Centric Transformation by Balancing Build and Buy - A Collaborative Approach Towards Sustainable Digital Banking Architecture.", #AP241480IB June 2023, click here

Hashtag: #Backbase, #digitalbanking, #engagementbanking, #retailbanking, #omnichannelbanking, #idcinfobrief, #adoptandbuild #bankingplatform


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Backbase

Backbase is on a mission to re-architect banking around the customer.

Backbase created the Backbase Engagement Banking Platform – a unified platform with the customer at the center, empowering banks to accelerate their digital transformation. From customer onboarding, to servicing, loyalty, and loan origination, our single platform — open and frictionless, with ready-to-go apps — improves every aspect of the customer experience. Built from the ground up with the customer at the heart, our Engagement Banking Platform easily plugs into existing core banking systems and comes pre-integrated with the latest fintechs so financial institutions can innovate at scale.

Industry analysts Gartner, Omdia, and IDC continuously recognize Backbase’s category leadership position. Over 120 financials around the world have embraced the Backbase Engagement Banking Platform. In APAC, the customers we serve include ABBANK, BDO Unibank, Bank of the Philippine Islands, EastWest Bank, HDFC, IDFC First, JudoBank, OCB, Techcombank, TPBank, and UBank.

Backbase is a privately funded fintech company, founded in 2003 in Amsterdam (Global HQ), with regional offices in Singapore (APAC HQ), Atlanta (Americas HQ), and operations in Australia, India, Indonesia, Malaysia, Philippines, Thailand, Vietnam, Latin America, and the UK.