We spoke to 12 Challenger bank CEOs about digital strategy, growth plans and customer focus. We summarise their three main strategic priorities.
A new banking revolution is well under way. New kinds of customers, platforms, shifting business models and above all technology; have all combined to create a diverse and shifting population of banks.
KPMG wanted to understand how these banks are navigating a fast-evolving landscape, so we spoke with 12 Challenger bank CEOs. We wanted to explore their digital strategy, growth plans and customer focus, as they shift from disruption to consolidation.
These Challengers are designed for an environment that rewards collaboration, responsiveness and innovation. Machine learning and data analytics reveal customer behaviour, helping build new products and processes.
Open Banking will mean best-buy sites will no longer simply show customers the pick of mortgage or savings deals. They will match customers with the right bank and tailored products, instantly.
In response, all banks need to develop new managerial skills and organisational models to compete in such a dynamic ecosystem. However, these skills may need to be adopted from outside the financial services sector.
The conversations with these CEOs make it plain: we have barely begun to see the change their business models and technologies will bring to the financial sector. Their insights have far-reaching implications for financial services – and go way beyond.
Our report found that their strategic priorities fall broadly into three categories.
The Challenger bank CEOs have an opportunity their incumbent peers don’t: they get to define their market niche and their branding around contemporary themes, customers and technology. It’s not yet clear which kinds of differentiation will yield sustainable returns. But each of them was clear on the need to carve out a unique identity.
There is one issue on which they are united. For Challenger CEOs, customer experience is everything. Accessibility, relevance, outstanding service and personalisation are all key. The challenge is creating loyal customers for their own niche in an industry where the one-stop shop is the ‘old’ norm.
In a highly regulated, high-risk business like banking, the Challenger CEOs have a dilemma. They must innovate and conform; offer unimpeachable security for money and data – while creating frictionless services. As ever, risk management is about balancing compliance while delivering opportunities – an increasingly complex task with data protection and cybersecurity on the agenda alongside tough capital rules.
The banking industry has changed and the CEOs we spoke to are proud to be agents of that revolution. That means we need to consider new ways to think about them – and what they need from the financial services sector to continue their mission of elevating customer experience and shareholder value.
One thing is certain: the best way to move forward is to think a step ahead.
Read our full Challenging Perspectives report. (1.8 MB)
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