Successful IT strategies for banks

It’s a challenging time for many banks across the DACH region. Digital banking platforms, AI-powered services and seamless customer experiences are increasingly encroaching on the territory of traditional banks. While companies like Delivery Hero, Spotify and Zalando thrive with customer-focused technology, many banks can’t keep up because they’re held back by old-fashioned team structures and disjointed IT systems.

At G+D Netcetera’s recent Digital Banking Summit workshop, we explored IT strategies for DACH banks, showing how they can flourish by transforming their approach to technology - moving beyond seeing IT merely as a cost to recognise it as a powerful driver of strategic growth. In this article, we’ll take a quick look at some of the questions we discussed in detail during the workshop.

Banking customers in Germany, Austria and Switzerland now expect the same quality of service online that they get from tech companies. They want secure, convenient, personalised experiences with the freedom to manage their financial affairs through whatever channel suits them at the time.

Banks that embrace AI-driven personalisation could see impressive results, with customer engagement increasing by up to 400% compared to traditional approaches and retention rates improving by up to 30%.

Spanish bank BBVA has shown what’s possible with a customer-first digital approach. Its investment in tailored financial advice and digital services led to 117% growth in new customers, with 70% of its sales now happening digitally. This matters for DACH banks, as consulting firm McKinsey discovered, banks with the most satisfied customers saw their deposits grow 84% faster than those with dissatisfied clients.

Today’s customers want banking that goes beyond the basics - they’re looking for comprehensive financial tools, supportive communities and seamless experiences whether they’re online or in a branch. The banks that deliver on these expectations could gain a significant advantage over their competitors.

Recent tech breakthroughs in cloud computing, mobile banking APIs and AI have pushed many European banks to pursue digitalisation - mainly to boost efficiency and slash costs. According to McKinsey research, banks could use automation technology to reduce operational costs by up to 30% within five years.

But there’s a problem with this approach. While some banks see digitalisation purely as a cost-cutting exercise, this focus steers attention away from the customer experience. A recent study found that retail banks across Switzerland and Liechtenstein are using automation primarily to save money rather than add value for customers. This ‘short-sighted approach’ stands in stark contrast to wealth management firms, which typically use technology to enhance their advisors’ capabilities and create more personalised client experiences.

The consequences? Traditional banks overly focused on efficiency are losing customers to tech-savvy newcomers like N26 (Germany) and Revolut (UK). These neobanks have won millions of customers by prioritising the digital experiences, not just reducing costs.

Focusing digitalisation on cost-cutting can start a dangerous downward spiral: as customers leave for new competitors that offer better digital experiences, banks feel pressure to slash costs even further, potentially making their customer experience even worse.

So what can traditional European banks learn from success stories? Several established banks have successfully transformed into technology-first organisations, providing inspiration for those yet to make the shift.

ING was one of Europe’s first banks to successfully adopt an agile organisational structure, similar to approaches used by Google and Spotify across their tech and product teams. By organising staff into squads and tribes, they fostered better cross-functional collaboration and accelerated innovation. This approach helped ING bring products to market faster while boosting both employee engagement and productivity.

Société Générale has shown how a platform approach can drive a successful transformation. The French bank created SG Markets, a unified digital platform serving all their global clients. This open system integrates seamlessly with partner services to address local market requirements. Their approach strikes a good balance - automating routine work while equipping advisors with enhanced digital tools to service their client.

DBS Bank (Singapore) is another digital transformation success story. The bank evolved from having Singapore's worst customer satisfaction ratings to becoming recognised globally as one of the world’s best digital banks. Their strategy involved being 'digital to the core', immersing themselves in the customer journey and operating with startup agility. The transformation led to the development of more than 600 AI models that significantly enhanced customer value, giving them a crucial advantage over competitors.

As crypto banks and fintech disruptors carve out growing slices of the market - Switzerland’s impressive 21% crypto adoption rate leading Europe - many traditional banks will be feeling the heat to adapt or risk irrelevance. The lessons from ING, Société Générale and DBS Bank show that success comes from treating technology as a strategic advantage rather than a cost-cutting exercise.

To move forwards, banks will need to reinvent themselves as technology-first organisations with a focus on the customer experience. DACH banks that move on from thinking like financial institutions and start operating like software companies will likely flourish.

To learn more about how your bank could adapt and thrive using a strategic digitalization strategy, speak with our experts and see how G+D Netcetera could help.