Banking 2015: Picking up the Pace

Banking 2015: Picking up the Pace

Banking is a marked industry, where non-bank disruptors are taking dead aim and changing consumer demographics are altering the banking business model. From our vantage point, we continue to see that some banking business models are being shaped by sandpaper when a chisel might be more appropriate. The speed of change driven by technology’s impact on customer behaviors and demands is far outpacing the rate of change by banks. The choice, then, is clear for traditional banking organizations that seek to elbow their way forward in a crowded marketplace. Banking management and boards need to aggressively pursue a change in how they think and act about their businesses and their customers. They must get much more comfortable with acting more like their customers whose daily lives are influenced tremendously by social media applications and mobile devices than ever before. There is no going back; only forward.

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Banking is a marked industry, where non-bank disruptors are taking dead aim and changing consumer demographics are altering the banking business model.

From our vantage point, we continue to see that some banking business models are being shaped by sandpaper when a chisel might be more appropriate. The speed of change driven by technology’s impact on customer behaviors and demands is far outpacing the rate of change by banks.

Granted, there are pockets where clever people and canny organizations have supercharged innovation in traditional banking organizations. A growing pack of non-banks, however, continue to nimbly pick off more revenue-producing pieces of businesses in markets where traditional banks, still saddled with weighty cost structures, long held sway.

These innovators are often far ahead on the arc of advanced digitization and data analytics, and they have appealed to an increasingly disillusioned pool of banking customers.

These disruptors grasp that there is real opportunity to rattle a traditional industry beset by regulatory overload, complexity of operations and informational technology (IT) systems, a growing number of commoditized products, and a portion of customers who feel untethered to their banks – many of them among the Millennial population segment.

Reaching customers with messages that value comes with a price will mean taking a risk, but in this environment it is a risk worth taking.

Change, though, has proven to be difficult for banks. For their entire careers, banking leaders have been conditioned to take a conservative approach, especially in the current climate now where broad scope of regulation is onerous. Still, it isn’t much of a stretch to suggest that the banking industry – and many of the people in it– entirely too often are resistant to ideas for change.

But a culture that accepts ideas for change must be adopted.  Therefore, in this paper we delve into the issues of:

  • competitive threats and opportunities created by disruptive forces
  • operational and technological transformation
  • customer connectivity as part of business models and strategy
  • advice around how banks should stay agile in order to compete in an environment which is changing rapidly.

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