McKinsey: Rewired for value: Digital and AI transformations that work

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About the author(s)

Shital Chheda is a partner in McKinsey’s Chicago office, where Ahmed Nizam is a consultant; and Vincent Genest is an associate partner in the Boston office, where Eric Lamarre is a senior partner and Marti Riba is a partner.


Our analysis of data from the banking sector provides definitive proof on how digital and AI transformations create bottom-line value.

m seeing digital everywhere in my company except the bottom line.” It’s not unusual to hear a version of that grouse in many C-suites, and the data bears it out. Large companies globally have captured, on average, only 31 % of expected revenue lift and 25 % of expected cost savings from their digital and AI transformations.

About the authors

As we argue in our book Rewired: The McKinsey Guide to Outcompeting in the Age of Digital and AI, leadership commitment and alignment around the value at stake in a digital and AI transformation are crucial. Securing those elements is hard if leaders are skeptical that the necessary investments of time and money are worth it. While many reports show high correlations between digital performance and value, hard evidence tying digital and AI transformations to improvements in operational KPIs and financial performance has been scant. Until now.

About the analysis

The analysis is based on three actions. First, we used McKinsey’s Finalta Global Digital Benchmark, which tracked the performance of 80 global banks every year from 2018–22 against a set of 50 normalized metrics. From there, we isolated performance in two metrics that are core indicators in digital retail banking—the %age of mobile adoption by their customer base and the %age of sales originated in digital channels—to define 20 digital leaders and 20 digital laggards. Second, we combined this data with McKinsey’s Corporate Performance Analytics to see how banks ultimately perform against such financial metrics as total shareholder return, growth, and expenses. Third, we ran a blind assessment (the identities of the banks were hidden) of the maturity of digital and AI capabilities of the leading and lagging banks.

To plug this data gap, McKinsey turned to the banking sector, which has enough history with digital transformations to produce meaningful findings and where we own a unique longitudinal data set .

The results of our analysis make a convincing case that digital leaders are creating much more shareholder value than laggards.

Between 2018 and 2022, digital leaders achieved average annual total shareholder returns of 8.1 %, versus 4.9 % for laggards. Leaders also had significantly better returns on pretax tangible equity (ROTE), growing it from 15.5 % in 2018 to 19.3 % in 2022, versus laggards’ more modest growth, from 13.6 % to 15.3 % in the same period.

The source of the greater value capture by the sector’s digital leaders is their success at growing revenue and better containing expense growth. Between 2018 and 2022, digital leaders grew their active customer base 0.5 % and their retail revenues at 0.8 % annually, while digital laggards saw zero growth in their active customer base and a decline in retail revenues of 1.4 % annually. Over the same time period, leaders’ operating expenses grew at 1.3 % per year, while laggards’ grew at almost twice that rate: 2.3 % per year.

What are the indicators of this difference in growth? It’s not mobile adoption, where the difference between leaders and laggards hasn’t changed over time (Exhibit 1). The reason is that it’s relatively straightforward to create an app, and any new feature is quickly seen and copied. The mobile app must perform well, but it’s just a table stake.

McK Exh 1  YYYY

The reason for this large differential is that to drive digital sales, leading banks go well beyond the mobile app to digitally transform what’s hard to see and hard to copy: the end-to-end process from origination to fulfilment to servicing. To do this, they must orchestrate hundreds of teams capable of developing digital and AI innovations, day in, day out, and across all their customer journeys and core business processes. Knowing what to do is important, but executing on the “how” is what makes the difference.

This is a shortened abstract of “The value of digital transformation,” which originally appeared in Harvard Business Review.