Digital transformation has long been a Herculean task for banks. In an extensive study conducted by Forrester Research one year ago, 81% of banks confirmed that they were working on, or were at least planning to work on, comprehensive digitalisation initiatives. Since then, the need for action has continued to grow. Deloitte recently surveyed 17,100 customers in 17 countries about their banking preferences. The result: most customers are still largely satisfied with their bank and are exercising patience. However, the demand for digital services is rapidly increasing. Banks that position themselves as digital champions today by taking full advantage of megatrends such as Open Banking will without doubt be among the winners of tomorrow.
But how does successful digital transformation work in banking? Which transformation partners support banks in making their business models fit for the future? In this blog post, we shed new light on the potential of newly emerging innovation partnerships in which banks, management consultants and FinTechs all pull together. In particular, the cooperation between consulting companies with strategic know-how and emerging FinTechs with technological and problem-solving expertise has lots of new potential in store. In the end, banks reap the benefits of agile and practical innovation processes.
DIGITAL TRANSFORMATION IN BANKING IS NO LONGER AN OPTION – BUT HOW CAN YOU ENSURE SUCCESS?
For banks, digitalisation has long since ceased to be a question of whether and when - it is now a question of how quickly it can be implemented. With the introduction of PSD2, the European Union has created the legal framework for the opening up of banks to third-party providers. As described above, customers’ expectations of banks in terms of digital services are mounting. On the other hand, legal requirements are also pushing banks in the direction of Open Banking.
Banks are thus faced with crucial strategic decisions that will fundamentally influence their future business model. With it comes to strategic issues, renowned management consultants have proven their worth over many years by being lifesavers for banks. Hardly any bank makes a major strategic decision without first obtaining a market study and feasibility analysis from a recognised consulting firm. Turbulent times often signify booms for McKinsey & Co.!
Management consultants boast a wealth of well-founded content about the digital future of banks. Informative articles on digital growth strategies, such as this one from McKinsey, bear witness to the conceptual expertise of management consultants. In extensive consulting projects, studies, analyses and concepts are developed by consultants in cooperation with the strategy departments of banks. However, how can banks put their money where their mouth is?
DIGITAL TRANSFORMATION NEEDS PRACTICAL RELEVANCE AND TANGIBLE SOLUTIONS
The days when concepts were refined for months on end, only to end up in the filing cabinet, seem to be well and truly over. The pressure on banks to act is growing immensely - not least because challenger banks and neo-banks such as N26 and Revolut are challenging the market share of traditional banks. Strategic concepts must be followed by concrete solutions and a greater willingness to try them out. In an interview with Payment & Banking, banking and FinTech expert Sven Korschinowski of KPMG points out that large banks in particular often lack the courage to deal with issues related to digitalisation: “They have to do away with old customs. New ways of offering and delivering their products is what is called for.”
The megatrend of digitalisation is not only forcing companies in the banking world to act quickly. After all, the prevailing philosophy of the hour is agile transformation: changes and innovations must be introduced, tested, analysed and optimised as quickly as possible. Agile thinking and action are also required at traditional banks if they want to ensure they don’t lag behind when it comes to digitalisation.
Banks and their strategic consulting partners are thus faced with the challenge of implementing concrete solutions quickly and efficiently, which is where the emerging FinTech industry comes into play. According to KPMG, around 100 billion euros were invested in FinTechs across the globe last year - an absolute record and twice as much as in the previous year. This makes FinTechs an important transformation partner for banks and their management consultants. They help to implement transformation concepts, created by management consultants on behalf of banks, both quickly and agilely by using digital solutions. FinTechs are thus expanding the previously successful innovation duo of banks and consultants into an innovation trio: banks, consultants and FinTechs.
THE INNOVATION TRIO OF THE FUTURE: BANKS, CONSULTANTS AND FINTECHS
From our own experience, which we have gained from taking part in numerous banking projects, we can confirm the trend towards practice-oriented digitalisation. Promising innovations in the Open Banking movement emerge every day. For example, banks and consultants have new tools at their disposal which they can use to implement tangible digital solutions. In times of great change, strategic know-how is a critical success factor for banks. However, it is only in combination with feasible solutions that measurable added value is created for all those involved - including customers who ultimately expect a modern banking experience.
We warmly invite all interested consulting companies to engage in a dialogue with us. We look forward to inspiring discussions and a lively exchange - for faster innovation processes, agile transformation and a digital banking offering with a future. Get in touch!