For retail banks, today’s markets are fraught with challenges: new digital competitors and digitally empowered customers prominent among them. Yet most still pursue business as usual, striving to be all things to all customers.
Despite their best efforts to focus on the customer, many still don’t offer what their customers actually want. These banks also tend to manage their extensive channel networks — including digital — separately, not as a holistic function impacting all aspects of their retail operation.
LEAN AND MEAN
Mainstream banks have much to learn from the nimble, digital disruptors offering the trusted, transparent services that today’s customers increasingly seek, all built on a lean, asset-light business model.
These agile, innovative banks will also be more customer-centric and organize their businesses around customer segments, rather than around product categories. In addition, instead of increasing proprietary investments, they will partner with other companies, both in and out of the banking industry, to leverage best-in-breed innovation.
So...how should bank fight back?
Banks will have to develop new capabilities and strengthen existing ones.
Internal efficiency: dramatically improve efficiency and business processes to match those of new entrants (to stay relevant in price wars)
Customer-centricity: organizations built around customer needs, instead of products, allow for increased flexibility and a ubiquitous banking experience
Culture of innovation: open innovation infrastructure, taking into account the ecosystem of customers, employees, and partners.
Redefined business boundaries and models: collaborate to provide superior service and meet customer demand; make banks hubs of capabilities and services - part of larger value networks
Agile: agility will be a key success factor replacing scalability – driving players to quickly reorganize around customer needs, instead of around products
Specialized: become best-of-breed relying on partnered ecosystems and collaborations, instead of on proprietary investments
If banks don’t make better use of new technologies and analytics to become part of their customers’ digital lives — working with third parties to make their products and services relevant in multiple contexts — they risk becoming sidelined by alternative providers in important new service areas.