Right now, with the development of digital transformations, financial institutions are able to bring banking to customers more seamlessly than ever before. At the same time, the average person is more alienated from banks than ever. What does it take for incumbent financial brands to shift gears and evolve their business? And, conversely, how can they avoid extinction and join the banking revolution in real time?
In Evolve or be extinct, the Financial Times Focus in partnership with Mambu explores what banks need to build stronger, more competitive and socially sustainable organisations for the future.
It’s no secret that banking has shifted in recent years, accelerated by the fintech surge and the demands of the pandemic, causing a massive disruption in how financial brands compete for the same audience. Many banks that once relied on a mix of bricks-and-mortar branches, ATMs and rigid online banking portals, now find themselves needing to offer a seamless and comprehensive digital experience to customers who have changed their behaviours and banking expectations seemingly overnight.
67% of banks think that without a digital transformation, they will lose market share in the next two years. 74% think Big Tech will be the beneficiary of this exodus and that they will hold a market leading position in the next five years.
However one group of digitally advanced companies is defying this trend. They are called the ‘evolvers’ and their experience and performance on key metrics is important because they can help shed light on what journey those less digitally ‘evolved’ banks should embark upon in order to avoid extinction.
Here are some of the evolvers common traits:
- They have an agile and customer-centric mindset
- Their digital transformation is mature
- They have flexible technology
- Their business approach is underpinned by data analysis
- They are more prone to address change and are intentional about finding social purpose
But the evolvers’ single most-dominant characteristic is their ability to outperform their competitors on business metrics like speed to market, customer turnover and assets under management. This would be no small feat already, but to add to their achievements the evolvers also boast 89% in employee satisfaction (as opposed to 58% of the total respondents).
Financial institutions that want to survive and thrive into the future need to realise that the time to act is now. They need to emulate the evolvers’ digital-first, customer-centric approach and the change must not be cosmetic only: their transformation should include different business units, from tech to partnerships, from talent to a committed ESG strategy and overall the focus on the business emotional intelligence.