The future of banking is one of continuous, accelerating change. Some banks remain confident that capital and regulatory barriers to entry will protect them for some time to come. Most are concerned about the economic compression of their traditional business, shifting customer expectations, and the emergence of serious new entrants. The majority recognize that that their traditional business models are unlikely to endure.
It follows that banks need to develop the ability to change continuously. This will include constant small changes and adaptive moves inside their current business model, as well as large-scale transformation that changes ‘who we are, what we do, the customers we serve and the way we do things around here’. Most players in the industry have embarked on a process of simplification and cost reduction. This has bought them some time, especially while dealing with increased regulatory change. But it is not a long-term solution for growth and competitiveness.
Banks need to choose their destiny. They need to make explicit choices about their future business model, form a clear vision of how to develop it, and then execute it boldly and with discipline. Wise decision making and change investment are essential. Those that shrink from this, or opt to wait and see, risk having these decisions made for them by external forces.
Whatever path you choose, change will be inevitable and continuous. The change leaders have shown the way. They are comfortable with rapid, non-stop transformation, and they are generating the change outcomes their shareholders demand. They have the future in their grasp. Other banks could do worse than pay attention to what they do, so that they too may thrive in ‘the new’.