Two types of banks are emerging. Which type are you?

Posted on: June 25, 2018 by Wayne Fialo

Banks are at a critical inflection point. Market dynamics are changing at a pace unseen before. There is the introduction of Robotic Process Automation, AI, Blockchain, and IoT technologies. Then there is the emergence of FinTech competitors. Add into the mix increasing client demand and regulatory scrutiny and you have all the ingredients for a highly pressurised environment for traditional banks.

Such banks must consider their options. Perhaps they need to become more of an aggregator of financial services, rather than trying to build everything themselves. They certainly need to embrace transformation and look to partner with the FinTechs that could help them to compete in this changing market. Otherwise, they’re likely to not only be left behind but potentially cease to exist altogether.

Look Out 2020+: A view of the near future

Over the past few months, I’ve worked with our Executive team to put together the upcoming Atos Look Out 2020+ report* for Banking. And it’s pretty clear there is much for financial institutions to get to grips with in terms of technological and organizational change in the coming few years. In fact, I would go so far as to say that right now, we’re at a point of no return. Take this quote from the Look Out report:

“New players could capture up to a third of incumbent banks’ revenues by 2020, according to analysts such as McKinsey.”

Now, I can’t reveal everything that’s in report. Not yet anyway. But I can tell you this: It’s clear that today’s disruptive forces are splitting the banking sector and soon there will be just two types of banks.

Type 1 – the ones that sit and wait

You know the type – risk averse, protectionist and yet good at what they do because it’s what they have always done. But while the world shifts rapidly to digital, these players only pay lip service to change:

  • Customers might be clamouring for more convenient services and seeing their needs met by a growing number of smaller FinTechs, but these banks let competitors test the market.
  • Open platforms might be encouraging new ecosystems of partners to emerge and create truly end-to-end customer journeys, but these banks watch others build the initial relationships.
  • Agile and automated processes might be slashing costs and giving digital players a far better cost-income ratio, but these banks choose not to invest.
  • Contextual or intelligent risk and compliance systems might be bringing trust back to the sector, but these banks stick with what they’ve always had.

In most cases, these banks are content to wait and see what everyone else is doing first and assume they will be able to catch up later. They might even think that way it’ll all be much cheaper.

All the while though, the Banking world around them is changing beyond all recognition. As you may have already guessed, these are the players that will become the dinosaurs of the industry because, as McKinsey intimates, they will lose money and market share. In short, they will die out.

Type 2 – the ones that find their feet

What’s clear from the research behind Look Out 2020+ is that a constantly evolving market leaves little room for the universal banking model that established players have enjoyed for decades.

Today’s consumers want more choice, more freedom, and more control over their finances. Yet, that doesn’t mean a bank cannot be at the heart of a customer’s every financial interaction. In fact, there are multiple new opportunities for banks to extend their reach:

  • It could be through the digitalization of customer journeys – personalizing services and responding to individual demands.
  • It could be as the orchestrator of services – monetizing data within an ecosystem comprising partners as diverse as high street retailers, connected car manufacturers and even FinTech competitors to provide better customer experiences.
  • It could be through lower-cost, standardized utility processes and intelligent automation – speeding up and ensuring more accurate decision-making.
  • It could be establishing completely new ways to manage risk and compliance – slashing the costs of cybercrime and fraud for the bank (or the bank’s entire ecosystem).

With FinTechs addressing many of these opportunities already, Look Out 2020+ confirms that now is the time to choose where you stand.

So which type of business are you? More importantly, which type of business do you want to be? Atos Look Out 2020+ for Banking launches next week – I highly recommend you read it as you prepare to answer that question.

*Atos Look 2020+ industry trends report provides an in-depth analysis of the emerging megatrends, business transformation opportunities and technologies that will drive innovation in the years ahead.


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About Wayne Fialo
Global Financial Services, Head of Banking for North America and APAC, Atos
Wayne is responsible for Sales, Account Management and ensuring delivery to Atos’ Banking Clients. Wayne brings over 30 years of hands-on financial services and business technology experience with in-depth knowledge and experience in wealth management, investment banking, asset management, retail banking, credit cards, core banking, and securities operations & processing. Wayne works with high-profile clients to address business requirements and helps develop solutions to meet their needs. Wayne started his career at Citibank and has also held senior positions at Morgan Stanley-Dean Witter, IBM and Wipro.

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