i. Deep capital reserves-Tier-1 capital is at decade-high ~12.6%.
ii. High liquidity: Loan-to-deposit ratio fell to~90%, as comp. to 120% in 2007
iii. Innovation: Investment in digital capabilities & partnerships
The unstoppable march of ‘Four Horsemen’ —Disintermediation, Commoditization, Unbundling/Rebundling, and Invisibility— continues.
—Traditional Model: Banks vertically integrated. Competition between banks with similar offerings.
—New Model: Modularization. Specialized service providers compete on product innovation and distribution.
- Short-term Profitability → Customer Obsession
- Mass Standardization → Mass Customization
- Limited Products →Diverse Products
- Channel Islands → Integrated Ecosystems
- Fragmented Products→Focused UX
i. Just a front-end, based on the existing core. No own license.
ii. Develop new front-end solutions on existing core and own products.
iii. Front-ends with own modern core banking, own products, and license
iv. Independent bank with own modern core. Proprietary and 3rd party products
v. BaaS i.e. Core banking products offered to the business, FinTechs, Telco's, No B2C.
vi. Open API’s for 3rd party developers, in order to focus only on core products
—Where to play?
—What network plays to follow?
—How to monetize ecosystem play?
—How to set up critical building blocks?
—How to solve for ‘trust’?