The unprecedented challenges posed by the COVID-19 outbreak make the digitisation imperative all the more urgent for banks, according to a new report by Boston Consulting Group (BCG).

The report, titled Global Risk 2020: It’s Time for Banks to Self-Disrupt is the tenth annual survey of the health and performance of the banking industry by BCG. It examines both the current pressures brought on by COVID-19 as well as the preexisting challenges that the crisis has intensified.

The consultants argue, accelerating digital transformation efforts are part of a broader transformation that is required to manage expanding risks, serve customers effectively, and raise profitability to a sustainable level.

The report emphasises that banks can successfully weather the current storm and strengthen their market positions if they take the right steps now. BCG categories these steps into three phases: reinforce essential activities, anticipate downstream impacts, and accelerate digital transformation.

“These are both difficult and unprecedented times,” said Gerold Grasshoff, a Frankfurt-based BCG senior partner, coauthor of the report, and global leader of the firm’s risk management and regulatory compliance practice.

“But they can also serve as a catalyst for banks to accelerate initiatives that have long been necessary—and that have progressed too slowly. Best-practice banks will turn the crisis into an opportunity to build more secure futures for themselves and for their customers.”

When it comes to accelerating digital transformation, the report argues the tactical-improvement efforts that banks have attempted in the past have not delivered the transformation needed.

“Arguably, one of the most pernicious risks facing banks globally is not external volatility as much as it is a reluctance to shake up institutional practices and norms at their core,” the report states.

According to the report, risk, treasury, and compliance functions can help banks respond to the present crisis and lay the groundwork for banks’ long-term success. By using AI, machine learning, and other advanced technologies and practices, banks can improve overall steering, deliver predictive real-time insights, and execute faster and more efficiently. Yet success requires a willingness to see disruption not as a threat, but as a lifeline.

“Banks interested in reducing the risks to their business, enabling integrated balance sheet management, and modernising compliance must develop a clear digital strategy, redesign core processes, and establish the right digital enablers,” said BCG’s Gerold Grasshoff.

“This report lays out the path to digitisation and presents concrete examples of what that transformation looks like and the results it can achieve.”

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