The ABBL and KPMG Luxembourg in early December released the results of their “.” The study focuses on organisational strategies, tools, client interactions and collaborations, in particular between universal banks, private banks and fintechs.
“What digital transformation meant for banks two to three years ago is nothing compared to today’s reality,” commented Xavier Roch Lhotellier, partner, advisory at KPMG Luxembourg. “Digitalisation is now the cornerstone of business success, the powerful tool that not only bridges gaps but also unlocks and drives competitive advantage.”
KPMG and the ABBL polled 23 banks, 12 of which had their headquarters in Luxembourg. Respondents had more than €285bn of total assets under management and represented 50% of the Luxembourg market. Here are a few takeaways from the survey.
Private banks lack in-house digitalisation skills
“A digital divide exists between universal and private banks,” found the survey results. In general, universal banks (which carry out several types of banking activities) have more decision-making power and in-house skills for major projects, “while private banks face more challenges due to limited autonomy and resources.”
In addition, three-quarters (75%) of private banks responded that they do not have the “right in-house skills to support digital transformation projects in the Luxembourg legal entity.” Universal banks, on the other hand, showed the opposite trend: 78% said they had the right in-house skills.
Around half prioritise digital transformation
Luxembourg banks have shown “mixed progress” when it comes to digitalisation, said the survey. “Only 57% of the banks surveyed prioritise digital transformation in their strategies.”
Moreover, there appears to be “a major gap between digital expectations and allocated resources,” found the results. “Nearly 60% of respondents allocate less than 10% of their training budget to digital and technical topics.” Only three out of 10 (30%) of banks have a head of digital transformation (or equivalent role) in the Luxembourg legal entity.
More interest in hyperautomation tech
The use of hyperautomation technology, like process automation (RPA), artificial intelligence (AI), machine learning (ML) and low-code platforms, is progressing, said the survey. The levels of maturity, however, vary. Around one in five respondents (18%) believe hyperautomation brings no added value, while 27% say they use hyperautomation solutions but on a limited basis.
Potential of fintechs
Banks have a “clear preference” for in-house, customised solutions for integrated risk management (IRM) and client relationship management, found the survey. Over half (56%) of respondents currently use an in-house custom IRM system and 33% use an in-house manual IRM system, for example.
The survey noted, however, that fintech is seen a s tool that can boost efficiency and help banks meet their compliance requirements. Two-thirds (64%) of respondents said they see a use for fintech collaboration when it comes to regulatory topics.