Accenture Banking Blog

The face of banking is changing—our big high-street banks are now having to compete, not only with each other, but also with the growing ranks of challenger banks and other third parties. To sustain their importance to the economy and remain relevant to their customers, this means banks have no choice but to innovate and adapt. Fast.

As banks strive to do this, I think the types of change they’re having to navigate can be divided up into three main categories:

  1. Changes to comply
    Over the past few years, the Change to Comply agenda has been a pressing requirement for most banks, with significant investment needing to be set aside for regulatory programmes. The focus recently has been on issues such as Ring-Fencing, Open Banking, Brexit and PPI remediation. However, given other new and continuing regulations such as IBOR and Basel III, it seems unlikely that the focus on compliance will ease off any time soon.
  2. Changes to compete
    Cost reduction remains a major focus as banks try to work out how to deliver more for less. However, legacy systems and high operating expenditures have hampered banks’ efforts to take out meaningful costs—meaning ever-more aggressive and innovative programmes are now needed if they’re to continue to compete both against other established banks and the neo/challengers attempting to reshape the landscape. That’s even before we get to the potential impacts from the tech giants such as GAFA.
  3. Changes to adapt
    It’s not just enough to comply and compete—banks must also stay relevant to their customers. This is driving increased investment in new technology and cloud-based infrastructures, with an intensifying focus on customers’ needs and end-to-end journeys. Realising the full benefits from these projects requires fundamental, bottom-up changes with serious investment and ongoing commitment. For banks that get all of this right, however, the potential benefits are huge. Their mass of customer data means they’re well-placed to tailor propositions to customers and win market share.

Winning the race

So, change in multiple dimensions is inevitable. But how can banks embrace it in a way that ensures they stay at the forefront of the disruption?

Here are some ideas for staying ahead:

  • Lean in and look for accelerators
    Don’t be afraid to partner with fintechs and new entrants where there is value to add. This goes beyond hosting a fintech or innovation hub. Instead, it requires leaders to truly empower their people to spot opportunities and bring pathfinders into change programmes.
  • Treat change and innovation as a journey and not a destination
    Innovation is a mindset that needs to come top-down as part of the culture. And leaders must constantly engage in change, weaving it into the fabric of the organisation rather than treating it as a series of inconvenient, but necessary, fixes. By removing the barriers to change and building an organisational culture that embraces innovation, banks can move away from a quick-fix mentality that doesn’t always address underlying issues.
  • Acknowledge different ways of delivery
    It’s important to recognise that different delivery methodologies—and even different types of Agile—may suit different programmes. For example, Agile is not a one-size-fits-all concept or an accelerated ticket to successful innovation. It’s also not a reason to avoid planning, particularly on regulatory deliveries with fixed deadlines. Delivering successful change is about understanding your programme objectives and organisational constraints—and thereby the appropriate treatment for each individual project. 
  • Put the customer at the heart of delivery
    There are conflicting pressures on banks—for example trying to reconcile regulators’ push for simpler customer journeys, with the need to reduce fraud risks. Putting the customer at the heart of every delivery will help to manage conflicting priorities and drive the right holistic outcomes.
  • Understand where experience is required
    Poorly managed cost-reduction initiatives can have the opposite effect, pushing up costs by reducing quality and limiting resource productivity. Banks should work out where they can use fewer, but more experienced, resources to deliver genuinely value-adding outcomes.

To stay ahead of the competition, banks need to innovate and adapt. This will require new approaches to delivery—putting collaboration, innovation and customer experience front and centre.

Moving beyond the status quo

It’s a complex path to navigate. Banks need to innovate with agility and speed, while also driving cost reductions and seeking out revenue gains.

Can they achieve all these things by sticking with the status quo? No. Will they need to invest in their future and explore alternative ways to deliver large-scale transformation? Yes. Put simply, banks will have to reinvent their delivery for a changing world. The most forward-thinking of them are already doing it today.

My thanks to Neil Daniels, Anna McKinven and Ian Leonard for sharing expertise on this topic.

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