What banks will want to become: a living business

Winnie-the-Pooh isn’t normally considered a business guru, but it turns out that A.A. Milne had a pretty good grasp on the challenge of digital transformation. “How does one a butterfly?&; Pooh asked Piglet in one of the stories. &;You must to fly so much that you are willing to give up being a caterpillar,&8217; Piglet replied. &8216;You mean to die?&8217; asked Pooh. &8216;Yes and no,&8217; Piglet answered. &8216;What looks like you will die, but what&8217;s really you will live on.”

Leaders at many retail and commercial are having similar conversations as they figure out how to win in a digital economy that is beginning to make their old business models look somewhat caterpillar-like. The big banks that succeed in the decade to come will be those willing to transform themselves by shedding the old versions of themselves in favour of something quite different.

The first step for many is to become outstanding Digital Relationship Managers, coupling their traditional strengths with a modern, open model approach to serve a wide range of customer needs and segments. It means having organisational agility and vibrancy that can quickly capitalise on the continuous and personalised stream of data generated by the digitisation of everything to satisfy the customer’s ongoing needs—both financial and non-financial.

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The next step forward for these banks is to think of themselves as a Business in ways that challenge traditional industry boundaries. That transition is about being hyper-relevant and embedding vitality across the organisation to adapt to changing customer needs and behaviour, beyond banking. It’s a transition that is not evolutionary but revolutionary. A bank that is a Living Business is not a better caterpillar, but more akin to a financial services butterfly. To take flight, banks will need to draw on ecosystem partnerships and plug-and-play functionality for all products and services, to refresh services and reinvent business models as fast and as often as needed. “Run the business” will essentially be automatic, while most talent and investment will be aligned against “change the business” activities. Many transactions will come through digital natives, such as Google, Facebook or equivalent multi-use digital platforms. Some transactions will be text-based, but a huge portion of interactions will be voice-based. From within that digital conversation, banks will need to identify the opportunities for a smaller number of higher-value transactions where it seamlessly provides more complex services, such as financial advice to its customers.

While the potential to grow revenue streams that come with Banking as a Living Business are enticing, banks will also have to embrace the more daunting aspects, such as prioritising their customer-oriented initiatives and cutting the caterpillar-improvement programs that do not map to the bank’s future business model.

Must banking as we know it die? Yes and no. Traditional concepts of the bank will die as banking moves from something customers step outside their regular activities to do and to a business that is fully integrated and embedded with the rest of their daily lives.

I join my colleagues at Accenture, Allen International, and Fjord to share further details in our new report, Banking As A Living Business: Driving Hyper-Relevance And Vitality Beyond Industry Boundaries. I invite you to read it as you contemplate what’s ahead for the banking industry.

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