How many articles have you read about a start-up from out of nowhere with a new business model that is winning over retail bank customers? If you’re like me, more than you can remember.
The story is always the same. The emerging players are the banking innovation “disrupters,” and traditional players are “the disrupted.” But can retail banks rewrite this story?
The reality is that they have to if banks want to avoid losing relevance and becoming back-office utilities. Consider that by 2020, different business models could deliver up to 80 percent of existing banking revenues, according to Accenture research.
Beat them at their own game
My colleagues published a point of view that details how banks can “flip the script” here. They explore how retail banks can evolve into Everyday Banks. These are banks that interact daily with customers and take innovative approaches to digital banking transformation.
These Everyday Bank approaches are inspired by companies like Google, Apple, Facebook, Amazon (GAFA). These companies are pioneers in both their use of digital technologies and in their ability to become indispensable to their customers. Steve Jobs described it perfectly when he said, “A lot of times, people don’t know what they want until you show it to them.”
The new banking disrupters
To build deeper connections to customers’ financial and non-financial lives—and increase revenues and lower the cost to serve—Everyday Banks must act more like GAFA.
Instead of watching outsiders take the lead with disruptive business models and banking innovation, Everyday Banks find ways to disrupt themselves—sometimes radically so. It’s about going on the offensive against disruptors while defensively managing the risk of losing revenues to them.
Taking on a whole new life
To do this, Everyday Banks must evolve their business models by assessing their own portfolio of businesses as well as pursuing next-generation business opportunities. Living services is one of these opportunity areas.
Living services are highly fluid, personalized and experiential services. They are possible thanks to deep customer data insight and a world where so many objects are digitized. They answer customer expectations for services that have individual resonance, not mass appeal.
Living services position the Everyday Bank in the role of dynamic (and digital) financial manager, not pure transaction processor. Living services include intuitive, digital services such as:
- Self-checking statements
- Proactive financial check-ups
- Ecosystem-based services (housing, travel, healthcare and more)
As banks create their digital agendas, they should explore the possibilities that living services can offer them to develop services that align with customers’ lives.