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Reinventing banks for the digital future


Through Digital Reinvention®, banks can prepare themselves for their evolving role in the era of open platforms and extended ecosystems.

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Reports of banking’s demise have been greatly exaggerated. Banking and banks are here to stay. However, the way banking is conducted – and at times who conducts it – is changing. Intense focus on cost cutting and efficiency is ceding to expansion and growth. But growth extends beyond traditional pursuits of new markets and customers.

Leading bankers are now prioritizing the creation of secure platforms and ecosystems supported by sophisticated digital technologies. By conceiving and creating the structures that define banking’s future, banks are rethinking their roles and activities from the ground up and from the outside in. We call this process Digital Reinvention®.

The changing face of banking

The global banking industry continues its advance through a period of dramatic change. Granted, the underlying chain through which funds are transferred among economies is slow to change. However, the ways in which banking is conducted and the entities that are actually performing banking transactions are both rapidly evolving.

A majority of the global bankers we surveyed recognize the changes occurring around them. In a recent IBM Institute for Business Value survey conducted in collaboration with the Economist Intelligence Unit, 66 percent of global banking executives told us that their traditional value chains are being replaced. Fifty-seven percent concluded that the boundaries between the banking industry and other industries are blurring.

Sixty-one percent of banking executives said the competition they face is coming from new, unexpected areas. Technological innovation is occurring in and around banks at what many consider to be an alarming rate. The face of today’s banking is changing, largely due to:

  • Ubiquitous digitization, combined with pervasive mobility and cloud computing, major advances in artificial intelligence (AI), and cognitive computing
  • A customer base in both retail and institutional segments that is technologically sophisticated and demanding.

The rise of banking ecosystems

Confronted by such broad-based and dramatic change, the first instinct of many traditional banks has been to protect and defend. The rapid evolution of financial technology companies– known as fintechs – was often either ignored or attacked. However, for many leading banks, this insular strategy is quickly giving way to a more accommodating strategy that is conducive to capturing, facilitating, and expanding innovation. Leading banks are increasingly positioning themselves at the center of what are now referred to as banking ecosystems.

With their substantial experience and expertise in compliance and regulation, as well as their deep, broad customer relationships, banks are increasingly partnering with, investing in, or purchasing the most successful and dynamic fintech insurgents. By doing so, banks increasingly play the role of ecosystem orchestrator. They create a platform, environment, and governance through which third parties such as fintechs can engage, collaborate, and innovate for the benefit of customers, ecosystem partners, and themselves.

Preparing for the future of banking

Having been stable for decades, if not centuries, the role of banks is changing. As ecosystems become more embedded in the psyche of bankers, banks will increasingly manage transparent distribution of products and services on their own platforms – enabling them to create compelling customer experiences that offer competitive advantage.

Banking industry executives recognize the imperative to digitally reinvent their business. Read the report to learn how they can lead their organizations through the process of Digital Reinvention.


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