Australian banks prioritise digital overhaul to meet demands

Australian banks are prioritising modernising their customer experience as they address issues with digital transformation caused by lack of data and legacy infrastructure, according to the Global Banking Benchmark Study by Publicis Sapient.

The study showed that 73% of Australian banks acknowledge that their current customer experience is lacklustre, which is increasing the pressure to adapt, especially to meet the demands of digital natives. The report underscores that customer expectations are changing rapidly, prompting banks to rethink their approaches.

Improving the customer experience and enabling greater agility have emerged as top digital transformation priorities for banks in Australia. Twenty-three percent of respondents highlighted agility, and 19% identified customer experience as their main focus areas. This contrasts with banks in Europe, the Middle East, and Africa (EMEA) and in North America, where improving cybersecurity is the leading priority, cited by 14% and 17% respectively.

Barriers to progress include limited access to data and budget constraints, both identified by 41% of Australian banks as key obstacles. A significant number—64%—also cited legacy infrastructure as preventing them from delivering the types of digital experiences that customers now expect. Regulatory issues were also noted, with 33% of respondents acknowledging these as compounding the challenges faced during transformation.

Tales Sian Lopes, Head of Financial Services, Australia & New Zealand at Publicis Sapient, commented on the findings: "Digital transformation is central to the shift that Australian banks must prioritise. It's encouraging to see that 31% of banks are now focusing on modern, cloud-based core systems, laying the foundation for greater agility and speed. But this needs to be matched with a long-term strategy that places the customer at the centre. They need to embrace AI led experience led transformation, only then can they overcome the limitations of legacy systems and better serve customers. With 43% of banks citing personalised customer journeys as their top CX priority, and 74% of Australians expecting more tailored services and conversations, delivering relevance at scale is no longer optional. It's expected."

The report, entitled "Digital by Default: Retail Banking in the era of Gen AI", also indicates that only 21% of Australian banks currently operate with a fully agile model. This figure is less than half of the 47% reported among Asia Pacific retail banks, highlighting a regional gap in adaptability and digital readiness.

On a global scale, 83% of Generation Z consumers show frustration with traditional banking processes, adding to the urgency for banks to address customer expectations. Additionally, 71% of global retail bank executives admitted that shifting consumer demands have exposed shortcomings in their current customer experience strategies. While 74% of executives recognise the need to better engage digitally native customers, only 35% of digital transformation budgets for customer experience are allocated to machine learning and generative artificial intelligence technologies.

The Global Banking Benchmark Study, conducted by Publicis Sapient, gathered feedback from 600 senior leaders in the retail banking sector across North America, Asia Pacific and EMEA, including 75 senior executives from Australia. The research offers comparative insights into how banks in different regions are addressing the evolving landscape of digital banking, the obstacles they face, and the opportunities for improvement.