What’s next after 10 years of banking disruption?


Written by: Jared Rorrer, Managing Director – Global Commercial Banking Lead

After a decade of disruption, what has changed for commercial banks?  

The digital economy has taken off around much of the world over the past 10 years, and the banking sector has been feeling the impact of this transformation and attempting to keep up with it. In fact, the digital transition in financial services began more than two decades ago: for example, PayPal launched in 1998 and grew rapidly in tandem with the popularity of online auction sites like eBay, and continued to expand as e-commerce spread into mainstream retail. But the disruption for banks has picked up speed over the past decade, and it went into overdrive when the COVID-19 pandemic drove much more activity online in 2020.

But enough ancient history—the point is fintechs and neobanks started evolving and challenging the status quo long before we even had names for them. Most commercial banks spent the past decade either underestimating or reacting too slowly to these challengers and how they have changed the banking landscape.

Neither of these responses is good enough now. In order to maintain market share and retain customers, banks have to stay on top of the disruptions, because they are not ending anytime soon. On our Disruptability Index’s 0 to 1 scale, in 2011 banking scored 0.43 for the current level of disruption, and in 2019 it scored 0.52, moving from “vulnerable” to “volatile.” And that was before the pandemic disrupted things even further. Here’s a look at the current state of play:

  • Our Global Banking Industry Outlook found the transition to digital banking accelerated sharply during the pandemic, with 50% of banking customers worldwide now using a mobile app or website to connect at least weekly with their bank.
  • As of 2020, 20% of banks were less than 15 years old, according to Accenture Research.
  • Fintechs have become major players. As of March 2021, CBInsights reported that globally there were 83 private fintechs with valuations of more than $1 billion.
  • In the last two years, “buy now, pay later” credit offerings have exploded and are now used by one in two US consumers and more than 60% of those under age 45.
  • Big techs, like Apple, Alibaba and Google, are competing directly in the financial services market and leveraging their enormous customer base

The trajectory for commercial banking

Incumbent banks were steadily moving toward digitalization before the pandemic, and most accelerated their plans over the past two years out of necessity. But there is no time for them to take their feet off the gas now.

Customer expectations have shifted permanently, and banks will need to offer convenient, fast and personalized service to commercial as well as retail customers. Being seen as a trusted and responsive partner during the post-pandemic recovery period will be crucial for banks that want to maintain strong relationships with their commercial clients.

Digitalization is just one part of the transformation that banks should be planning and executing to protect their place in the market and grow their revenue and client base. They have to find a way to modernize their operating model, change their internal culture and still have time and resources to drive innovation in order to compete with the digital challenger banks and fintechs. Cumbersome legacy systems and departmental silos can make this transformation extremely challenging.

A transformation with so many moving parts requires a strong, cohesive vision from banking leaders. Commercial banking is by nature complex and heavily regulated, so it is not an easy task to become agile and innovative. Some of the top priorities should include:

  1. Adopting a truly client-centric, digital-first operating model;
  2. Accelerating decision-making and moving forward iteratively so that innovative ideas are implemented without long delays;
  3. Investing in technology and data analysis that enables banks to achieve focus and efficiency, and demonstrate their responsiveness and empathy; and
  4. Fostering a workplace culture of digitally fluent employees across all departments and functions.

These priorities have to be undertaken quickly and simultaneously, which underscores the need for the transformation to be led by the C-suite. By prioritizing these changes, incumbent banks can escape the reactive cycle of trying to catch up with innovative challengers and become innovators themselves.


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