Retail banking – BLOG

It’s Change or Die. But don’t throw the baby out with the bath water

A transformed landscape requires a transformed business model. To foster growth and profitability in today’s wired and wireless world, the retail banking sector needs to turn process on its head and put customers at the centre of their thinking – while remaining ever more vigilant on legal compliance issues. For many, this is new banking – and its enabler will be digital technology. But old doesn’t always mean bad. Your business will have some key strengths. Now’s the time to look at them in new ways.

As we enter the age of the millennial generation, the banking world has changed in four key areas:

Technology: innovation is faster and more frequent, channels to market and ways to engage customers have increased, technology has gone mobile and expanded to an Internet of Things.

Customers: choice and expectations have risen, trust has been diluted or eroded, customers are always-on and highly connected.

Competition: new specialist players have entered the marketplace, new business models have arisen, the new Digital Bank has arrived.

Regulators: regulations are ever-increasing, new legislation surrounding customer and data protection is in force, barriers to new market entrants are more relaxed.

The Financial Brand reports that 30% of banking CEOs recognise “satisfying customer and retaining their loyalty as their no.1 priority”. And when McKinsey points to a 25% profitability increase that can be gained through the likes of automation and big data analytics, then it’s time to take a long hard look at your business to identify where the opportunities lie. Your SWOT analysis may look something like this.


  • Established brands
  • Core business knowledge
  • Physical presence
  • Personal relationship with existing customers


  • Legacy IT system, operational complexity and cost
  • Inability to match customer expectations on services, especially on digital channels
  • Process inflexibility and culture


  • Exploit customer data to improve products/services and operations
  • Improve use of branch for more service oriented activities
  • Acquire innovation through not sustainable fintech start-up


  • Reduced barrier of entries in favour of more competitive environment
  • Changing lifestyle of customer and Gen Y/Z
  • Bad banking practice driving reputational risks and eroding customer trust in financial institutions

When we look at the changing landscape it’s easy to focus simply on the negatives, particularly with observations like this, again from McKinsey:

“The fight for the customer has begun, but many banks are not well-equipped to win it. Yes, they have certain advantages, but these advantages are inconsequential to many customers who are happy to buy banking services in a piecemeal way, responding to experiences offered by new providers even if they have no history…”

It’s time to exploit opportunities. But also to leverage your strengths. Your legacy isn’t simply wrapped up in outdated and costly processes – the positives you have are an established brand and reputation, existing customers – and even those physical branches.

With digital technology there is more opportunity than ever before to gain a deep, insightful understanding of your customers – and having done so, focus on turning your strengths to your – and their – advantage. Products and services can be improved in line with customer expectations, make the most of your existing reputation and relationship, change the function of physical branches from transactional to advice centres.

But although easy to say, these are not small changes. They are transformational. And as Gartner points out:

“Large multichannel Banks should recognise that the Banking industry is at another significant inflection point, and only a major transformation to digital business models is likely to ensure their survival.”

To be a digital bank, you need to maximise growth by harnessing technology across channels:

  • Design and optimise your customer journey
  • Engage in real-time based on anticipated needs
  • Integrate rich customer and transactional information
  • Orchestrate processes and channels for a seamless experience and increased operational efficiency
  • Monitor activity to insure consistent high quality experience
  • Manage regulatory constraints

For practical advice on how to align these initiatives to the industry drivers of growth, profitability and compliance management, read our Hints & Tips.

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