Only 17 per cent of banks have succeeded in digitally transforming at scale, according to new research from Infosys and Efma.

More than 350 financial services companies globally took part in the report, which found legacy technology and system integration challenges were perceived as the biggest barriers to digital transformation, followed by the time and cost required to bring the concept to reality.

Only 39 per cent of banks believed their digital transformation strategy has had high or very high impact in accelerating product and service delivery, with a third stating it has helped enhance innovation processes.

Very few financial institutions - just 14 per cent - thought they were innovation pioneers, with just over half admitting to being mainstream or lagging in innovation.

The industry is increasing investments in mobility, advanced analytics and Open Banking Application Programming Interfaces (APIs) – technologies which were expected to make the biggest impact on banking in the next 12 months.

More than three quarters of banks said Open Banking will attract a lot of new investment, while half reported they were considering co-innovation with business partners as a key strategy for innovation in the next 12 months.

However, only 30 to 35 percent of respondents said their organisation was at a high or very high level of readiness with respect to APIs and advanced analytics.

Looking beyond efficiency, 88 per cent of banks said they were increasing investment to improve customer experience, while 79 per cent were investing towards new products and services.

The study also showed that in the next five years, the biggest threat to the banking industry will be from large technology companies, FinTech startups and challenger banks. More than three quarters of banks said that consumer technology giants and FinTechs will lead banking innovation.

Sanat Rao, chief business officer and Infosys Finacle, stated: “Digital deployment at scale needs a whole new way of thinking, designing and executing to permeate the enterprise – banks will need to transform culture, organisation design, operations and technology ecosystem.”

Jim Marous, report author and chief executive of the Digital Banking Report, added: “Leaders have a strong innovation culture, are investing in advanced technologies, are achieving strong financial results from their investments and are better positioned for the future.”

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