Technology is reshaping the operating-model of financial institutions fundamentally. Some thoughts:
1/ Banking & credit are the lifeblood of capitalism, and Credit and Debt play a big role in driving demand and economic growth.
1/ Banking & credit are the lifeblood of capitalism, and Credit and Debt play a big role in driving demand and economic growth.
2/ The line between deposits and lending is becoming blurred as cash-flow is delivered “as a service”. Non-traditional data makes it possible to create new products and serve new customer categories and markets.
3/ Deposit accounts are no longer the locus of control for customers as the center of the retail customer experience shifts to financial-management platforms, reducing interaction points between large banks and customers.
4/ Day-to-day digital customer experiences are radically changing customer expectations across all industries. Banks/FinTechs need to build an ‘operating model for the future’ and decide where to compete on the value chain.
5/ Banks that digitally underserve customers are vulnerable to tech disruption. The global banking industry is showing signs of renewed health, However, four horsemen-Disintermediation, Commoditization, Intermediation, and Invisibility- presents a big threat for many incumbents.
6/ Technology allows modularization of banking services causing rapid changes in the Playbook and Operating model of banks due to breaking up of traditional value chains into new stacks.
7/ The factors - PRICE, SPEED, ACCESS- important to incumbent financial institutions in remaining competitive are reaching equilibrium, and reducing their’ ability to differentiate. The new factors are CUSTOMIZATION, EXPERIENCE, and ECOSYSTEMS
8/ The evolution arc is moving along the following lines: BANK of TOMORROW = SOFTWARE, DATABANK, PLATFORM, MARKETPLACE,
and the BANK of the FUTURE = ASSET NETWORK & LIFE SCRIPT.
and the BANK of the FUTURE = ASSET NETWORK & LIFE SCRIPT.
9/ The changing operating models will transform the financial ecosystem in several ways, such as: From Cost center to Profit center, from Managed finance to Autonomous-finance.
10/ Several future scenarios represent fundamentally different ways of thinking about financial services, eg. Death of deposit accounts, Illiquid assets are tokenized, Online platforms become debt warehouses, Bank-as-a-Subscription. etc etc.
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