From a bank’s perspective, the glass is both half empty and half full as we head into a new year. The financial services industry continues to experience unprecedented change. One set of factors is purely environmental – sluggish global macroeconomic growth that shows no signs of picking up, rising regulatory capital and operating costs, depressed interest rate environments in developed markets, large non-performing assets in developing economies, and devalued currencies in several pockets, to name a few. This is putting further strain on the banking business, which is already bogged down by a marked slowdown in growth and profitability.
The second set of change drivers can be summarized in one word, namely, digitization. The rapid evolution and adoption of digital technology is posing a very real threat of disruption to the established banking business as customers continuously reset their expectations based on their experience in other businesses, and new competitors prove more agile than incumbents in fulfilling those demands. Regulators, once sworn to protect banks, are now gradually lowering the barriers by encouraging innovative and disruptive digital business models through open banking initiatives. But at the same time, digitization has also thrown open undreamt of opportunity. It has smashed the cost and efficiency benchmarks in banking operations. It has enabled unprecedented service and experience delivery. And it has enriched decision making with real-time, actionable intelligence.
Banks are therefore trapped in a delicate situation where they must transform into sustainable digital entities while battling serious environmental headwinds.Our viewpoint is that they can succeed in this parallel agenda only by implementing a bold and comprehensive “Truly Digital” transformation strategy. The time for playing at the fringes is clearly past.
We are working with several client organizations to accelerate their Truly Digital transformation journeys. This is a journey destined towards customer-first banking, towards empowering every part of the banking organization with real-time analytical insight, and towards extreme collaboration with a variety of ecosystems. Truly Digital banks are those that rest on a solid technological foundation, with their business and technology arms operating almost seamlessly. They are committed to using automation and artificial intelligence to improve operations as far as possible. And they know that the key to realizing their goals is to empower employees by building a culture of lifelong learning and innovation.
For 2017, we have identified 6 strategic and 6 technology trends linked to the Truly Digital theme that we believe will be the most influential in determining the future of banking organizations. We are delighted to share these with you through this Point of View.