Bank in an Ecosystem

Creating the world’s largest transportation company without owning cars or the world’s largest hospitality company without owning a single property – digital technologies have not merely transformed entire industries, they have managed to upturn many established business models and mindsets.
Sooner rather than later, the banking industry will also be subjected to the power of digital to distribute, decentralize and disintermediate. Not even the most resourceful banks will be able to single-handedly create a portfolio of products and services with the features and functionality to cater to every banking need. In an uberized banking model, one-click banking will be embedded into a range of customer facing services that are all part of one collaborative ecosystem.
Collaboration, cooperation and co-opetition are increasingly becoming part of the vocabulary in an industry where most players have thus far operated as islands. Sometimes it is the pressure of regulation, as in the case of PSD2, which compels banks to open up their payment APIs to other service providers. In other cases it is well placed self-interest. An example is the increasing collaboration between banks and their potential disruptors, namely, Fintech startups, to ramp up the quality and pace of innovation.
Universal banking in the digital paradigm will see banks leveraging collaboration and co-opetition to curate an aggregated ecosystem of financial and non-financial products and services that are relevant to the customer experience. These universal banking ecosystems will evolve continuously in terms of core functionality as well as scope and scale of service. API-driven collaboration strategies, for example, would enable banks to react quickly to new technology opportunities, like wearables and IoT, and accelerate innovation at the edge of the enterprise. Collaboration and co-opetition would also mean that banks will finally be able to address the niche needs and requirements of long-tail segments and markets.
Found this perspective interesting? Checkout our point-of-view on key strategic and technology trends that are transforming banking here. And do let us know what you think.

The customer isn't one

Identical individuality is a pre-digital concept. Digital customers expect their banks to recognize their individual identity, their contextual needs and create personalized solutions that are relevant to their unique financial life stage. Customers want financial partners, rather than financial service providers, who will help them achieve their financial goals and aspirations. And so forth.
So, as choice expands, customers will increasingly look for financial partners who can deliver the best combination of personalized experience and contextual value. Traditional banking models would need to be reinvented with the customer at the focal point and experience as the key competitive differentiator. Delivering customer value and experience will gain priority over even cost and revenue targets.
Technology will need to play a central role in enabling banks to create personalized, interactive and productive experiences. Like it has done through the property guide app of the Commonwealth Bank of Australia, which not only unifies and streamlines the mortgage experience for customers but also strengthens the bank’s position in the mortgage engagement cycle. Technologies like gamification and virtual reality will enable banks to influence behaviors and enhance experience. Gamification technologies, for instance, have been successfully leveraged by ICICI Bank, India’s largest private sector bank, to encourage goal-based saving, educate customers about card security and deliver information more engagingly.
As the digital-only Fintech revolution gathers momentum, banks would need to shift to a truly digital banking model where customer context and experience drive business strategy. This model should focus as much on experience design as on helping customers achieve their financial goals. Broadly customer-centric mass personalization strategies will no longer count. Success will belong to those who are able to integrate the value of individualized context to deliver a truly digital ‘segment of one’ experience.
Found this perspective interesting? Checkout our point-of-view on key strategic and technology trends that are transforming banking here. And do let us know what you think.