Recommendations
Here are several ways for banking and financial services executives to capitalize on the proliferation of digital:
1
Institute front-to-back digitization. It has become an urgent priority to effectively compete with fintechs. By coupling process automation with the digital customer experience and leveraging AI and data analytics, banks can truly become digital institutions.
2
Explore new customer segments and business paradigms. What was risky in the past is possible today due to data and analytics. For example, while traditional banks had previously not prioritized the small business segment due to profitability concerns, there is increased action in this space (such as Amazon’s partnership with Goldman Sachs) due to more available insights into the creditworthiness of small businesses.
3
Move toward a business model primed on platform centricity and smart aggregation. While fintechs embrace open banking-fueled democratization, regulatory compliance still provides banks with a distinct advantage. They should adopt a platform-centric approach, driven by digital banking application programming interfaces (API), to provide customers with a wide range of personalized products from partners, and to become the engine behind fintechs.
4
Invest in personalizing the customer relationship. Hyper-personalization concepts being explored include platforms that deliver integrated banking and business services, such as accounting and payroll management for small businesses; and usage-based product pricing, such as cash back based on purchase type.
5
Focus on re-building trust and resiliency. The shift to a digital-first society will create new questions around privacy, security and the impact of algorithm-based decisions on disadvantaged communities. Banks must ensure the decisions made by technology are unbiased and that the inner workings of the supporting algorithms are transparent.