In the modern business landscape, the digital revolution is in full swing. However, a surprising statistic reveals that a mere 31% of the anticipated revenue increase and 25% of the expected cost savings have been realized by the 89% of large corporations worldwide that have embarked on a digital and AI transformation journey.
This gap between expectation and reality can be attributed to a lack of understanding and confidence among business leaders about the true value of digital transformation and how to harness it effectively. Without a clear vision of the benefits, leaders are often hesitant to undertake the challenging and intricate changes necessary to fully leverage digital transformation.
To shed light on the value generated by digital transformation, we turned to the Finalta benchmark by McKinsey. This tool has been tracking the performance of 80 global banks annually from 2018 to 2022, using a set of 50 normalized metrics such as digital/mobile adoption, digital sales by banking product, number of people in contact centers, and number of branches.
The data reveals a compelling story: digital frontrunners are creating significantly more shareholder value than their less digitally advanced counterparts. Often, this value is derived from unique digital assets that are difficult for competitors to replicate.
This brings to mind the iconic line “Show me the money!” from the movie Jerry McGuire. In the context of digital transformation, business leaders need to see the tangible benefits before they fully commit to the process.
In conclusion, digital transformation is not just a buzzword; it’s a powerful tool that can significantly enhance business performance. However, to unlock its full potential, business leaders must first understand its value and how to effectively implement it.
This article is part of our ongoing series on Technology and Analytics, and is relevant to those interested in Digital Transformation, IT Management, and Change Management. The authors are associated with McKinsey and bring substantial expertise in the field of digital transformation.
