The banking industry is at a pivotal crossroads. Technological, societal, and market changes have upended the traditional value proposition. Banks know they have to start seeing themselves as technology-enabled businesses, harnessing the opportunities in front of them, or risk being left behind.
Although these times are challenging, they are full of promise. The banks that can skillfully maneuver this transition and build agility through the right technology adoption, partnerships, business models, and focus on ESG will solidify their position for this decade and years to come.
What should banks prioritize first? How can they overcome legacy technology, resistance to change, and win against, or perhaps, leverage, nimble new entrants? We brought together digital transformation experts from Mastercard, Pacemakers, and our own FinTech Practice to give you the upper hand.
Watch the webinar to unpack the topics at the top of every decision-makers' agenda:
- Leveraging AI and the latest mobile banking technology to retain and grow your customer base
- Implementing back-end digital transformation and automation for improved profitability
- Adopting a long-term strategy for sustainable, inclusive growth through ESG investments
- Forging partnerships with fintechs to unlock better business outcomes faster
Just because there are blips in the economy, focusing on your core business alone is not an option. You have to change. You have to transform.
Co-founder at Pacemakers
Staying still means moving backwards
Banks have been slow in the uptake of digital banking transformation. At the same time, their systems were built on an ancient, monolithic architecture that’s made transitioning to the cloud incredibly challenging while creating enormous inefficiencies. But the problems aren’t solely technological.
Allesandro describes how banks need to reconsider their business models: “Banks think they are stores that sell products. They are actually enablers of what people want – and what they want are three simple things. To buy, secure a credit line and protect a surplus through savings and investing.” As a result, banks have siloed offerings trying to “manage P&L and maximize the former rather than value.” To succeed in this new era, banks need to change by moving away from products and toward prioritizing customer value.
What do you do with all that data?
Banks have truly staggering amounts of data – figurative goldmines that they should be leveraging. But Andrea emphasizes, “Show me how many banks have a chief digital strategist who can tell them what to do with it.” There are so many ways to leverage what they already know about their customers to improve service, credit decisioning, and sales, and it wouldn’t even require them to draw on deep expertise and expensive resources.
For example, they can utilize existing customer data and combine the information provided from website cookies to understand shopping and spending habits and tailor specific digital banking services to customers. Best of all, tactics like these can be deployed without digging into more complicated blockchain and Web 3.0 layers.
The innovation dilemma and fintech partnerships
The incentives are wrong. Banks understand regulation and risk. But they don’t know how to innovate anymore. They can learn from partnerships with FinTech and absorb and learn on the sharp end of things.
Business Development Director, FinTech at Star
The panelists didn’t pull any punches when describing why banks so often fail at innovating. As industry insiders, they’ve all seen countless times “good intentions and zero implementation.” The dilemma banks face can be described simply as “If it’s not broken, why fix it?” Why would a bank, or any business for that matter, disrupt itself? There is also enormous institutional weight. You have to overcome shareholder pressure, customer expectations, internal teams, and leadership afraid to “risk their bonuses.” All of this paralyzes organizations.
You can shout digital innovation in banking, collaboration, and new business models all day, but that’s not going to drive change. Olivier has seen this countless times which is why he urges manageable, bite-sized transformations, “Start small and build trust. Focus on easy paths to innovate, partner and prove that it works via a positive track record.” In the case of banking, he cites foreign exchange as a good start as it comprises a small portion of overall revenues, creating an internal test case that can show the advantages of broader change.
Andrea has put this philosophy into action at Mastercard. While they may be a payments titan, she applies lessons learned from smaller companies and startups in her projects – create a concept, test, validate, iterate, and evolve on a small scale while developing a “readiness to fail” mindset. Though it may be a cliche, failure is an opportunity to learn and find the right fit.
If banks want to keep up, they have to do the same.
Go deeper: AI, back-end finance, forging fintech partnerships
The conversation picks up even more steam from here. The panel discusses AI, how to form strategic partnerships with fintechs to stay ahead of technology change, upskilling people and “managing up, down, and outside” for speed, and reduced latency. That’s just the beginning.
Think like a pro. Master your digital transformation journey and watch the webinar now.