Last month, we published a report conducted in collaboration with Financial Times Focus and because of its startling results, we fittingly named it ‘Evolve or be extinct’. The survey made it very clear that for banks, the technology-averse days are numbered and that they need to evolve now, or face rapid extinction by nimbler, tech-savvy fintechs.
Survey respondents give a clear indication that for banks with legacy systems and outdated mindsets the place to start is to redesign their roles within society. Mambu has been advocating for years the need to make a breach into financial services, but what’s now perturbing for banks is that FT Focus’ respondents are not smartphone accessorised gen z'ers - they are 500 senior banking executives.
So what’s stopping them?
The report found that the top 3 obstacles delaying bank transformations are:
- Short-term profits are prioritised
- The lack of cultural agility needed to deliver new models
- The risks of wholesale rip and replacement for core are too high
The mindsets of banking executives must shift to urgent. Enter digitalisation, enter intelligent design, agile thinking, data and, of course, the customer. The survey results put the spotlight on a key segment of companies that are further ahead on the digital journeys than other banks in the sample, called ‘the evolvers’. For half of the evolvers customer experience is the top digitalisation priority. They also rank their organisations as agile, customer-centric models.
If “Darwinism must die so that evolution may live”, the evolvers are proving to be a specimen for how banks can avoid extinction. All banks face similar challenges, but the ability of the evolvers to look outside their organisations and apply innovative thinking is an asset that sets them apart.
The report makes it clear, following the evolvers means overhauling innovation inside-out for big banks. And this is where to start:
- Modernising to a platform-based technology structure
- Developing workforce models to support new ways of working
- Innovating products or services to reach new customers
- Partnering with fintechs or tech providers
Nonetheless, evolution needs to be holistic. Digitalisation and customer-centricity won’t be enough for the banks of tomorrow. Banking needs to undergo a complete rethink of its approach to ESG:
Social purpose will be an important influence on future digitisation strategies as 81% of the banks surveyed agree that replacing outdated mindsets with a progressive social purpose is vital to their growth strategy.
What the survey drives home is not whether banks need to evolve or when, but how soon can they do it. In a post-pandemic world, competition is only increasing, and while many banks have lagged behind on their digitisation strategies, the more digitally advanced evolvers show there are some key steps they can take to speed up their transformation.