The trend around digital disruption, which is turning traditions on their heads throughout financial services, influences not only operations and business models, but also the risk management function.
As an example: If a disruptive new competitor launches a bank that sees all transactions conducted through a digital wallet interface, risk management needs to step up and investigate, checking out that digital wallet and looking for security gaps, process flaws and other potential risks.
Accenture’s 2015 Global Risk Management Study: North American Banking Report explores several of the risk management trends affecting banks in the United States and Canada, including digital disruption. The good news is that respondents believe digital disruption will, for most banks, become a cornerstone for profitable growth.
These banking leaders understand the following industry trends associated with digital disruption:
- Today’s banking customers expect seamless, omni-channel support. They will go elsewhere if their traditional bank does not provide it.
- Digital and analytics will be must-have tools to drive an omni-channel vision in banking.
- Banks that can shift to a full-service, Everyday Bank model will see the biggest gains in terms of profitable growth.
Banks in North America have been slow to jump on board. This includes the risk management function. Our North American survey found only 34 percent of North American banks reporting an increased risk appetite for digital efforts—while elsewhere around the globe 38% of banks are increasing their digital risk appetite.
Our 2014 North American banking market study found about three quarters of banking customers between ages 18 and 34 would bank with a retail, telecom or technology company that offered the right banking services. By 2020, we estimate up to a third of banks’ revenues could be at risk from this trend.
This means digital disruption is a burning platform for banks in North America.
The risk management function must be a part of the digital disruption equation. Risk management not only has a role to play in supporting a digital, omni-channel delivery model—it actually can guide banks forward, toward the vision. In my next post I’ll tell you how the risk function might be the key to capitalizing on digital disruption.
For more on risk management function and digital transformation, read our North American Risk Management Banking Report