The impact of the global pandemic on financial services was swift and at scale, adding significant momentum to the creation of digital banking business ecosystems. But to thrive in these ecosystems, banks need new and innovative digital business models.
Today’s banking business leaders’ biggest challenge is keeping pace with change. Whichever way you look at the industry, from the standpoint of the consumer, the investor, or plain competitiveness, the traditional banking model does not look sustainable anymore, while innovative digital models are going from strength to strength.
The pandemic has acted as a force multiplier of digital transformation. Every bank we have spoken to confirm a sharp acceleration in digital adoption across segments, as customers not only bank more on digital channels but also consume more products digitally.
The Internet has fundamentally changed banking, enabling a vast array of specialist providers to excel and thrive in different customer niches. Conversely, companies that try to offer everything to everyone; particularly those that try to do so alone, are likely to be mediocre at everything.
Like most industries, banking is also going the way of digital ecosystems. Vertically integrated pipeline-based business models are being replaced by ecosystems formed around customers. Digital technologies are unlocking unprecedented opportunities to create, deliver, and realise the value in new ways.
There is no silver bullet, but you have to start with culture. Without a clear and deliberate change to the culture and ways of working and the shift in mind-set that flows from that, traditional companies won’t be able to innovate. But a great culture isn’t enough. Becoming a truly digital business is a long journey.
Established businesses that have changed their cultures and developed new business models have worked hard to drive change across the whole organisation: in culture, ways of working, talent and skills, organisation structures, governance, funding, metrics, risk management, data, and technology.
Truly digital businesses operate fundamentally different from traditional businesses. Evolving from one to the other takes years of painstaking, deliberate change. Driving that change takes leadership, and not every leader wants to drive that change.