The disruptive effects of digitisation are placing financial institutions in a tight spot. Almost every bank is improving customer experience one way or another, investing in mobile banking or dealing with issues such as blockchains and AI (artificial intelligence). If this is done as part of a holistic strategy, the digital ecosystem can become a goldmine.
Glass half empty or half full? Threat or opportunity? Well over half (63%) of bankers who responded to the PWC Global FinTech Report 2017 survey had a positive view of the rise of fintech. It offers the established financial institutions the opportunity to reconsider fundamental assumptions about their own business so they can pave the way for new innovations. The bankers surveyed by PWC saw the most opportunity in expanding their own products and services. While almost 60% in Europe saw this opportunity, followed by the prospect of finally being able to properly exploit the potential of their own data and analytics (around 50%), in the USA, around 50% highlighted portfolio expansion and around 45% highlighted data use.
Disruption, revolution or evolution?
It sounds like a change, but in no way like a Waterloo, ‘hour zero’ or a stock market crash. Instead, the industry expects it will be able to build on what already exists – additional products and services – and fully exploit the treasures they have acquired over time: their immense reserves of data. This is exactly what futurologist Matthias Horx argues in a fascinating article debunking the “disruption myth”. With regard to “traditional bankers”, he claims that the fear of losing everything due to digitisation may primarily be a “fear of their own loss of significance”.
No two ways about it – the current development requires a reinterpretation of the banking business in several respects: the banks’ own role, the relationship between the bank and customer, sales channels – almost everything needs a rethink. As mentioned before, the majority of institutions are not discouraged by this, but can see the new prospects which open up to them as a result. According to Matthias Horx, when it comes to medium-sized companies, they are mastering “the art of gradual evolution: they are constantly improving not only their products, but their processes. In that way, they are simply eluding the disruptors – so they can shape the change they could themselves fall victim to!”
Digital Banking: Evolution of an Ecosystem
Combining evolution and disruption leads to much more productive results than assuming a sequence of alternating business models: “organisms and organisations are multi-layered entities that display a high degree of adaptability in their agility. The evolution is spontaneous, it fills every niche, it reinvents itself constantly”, writes Matthias Horx. In this light, disruptions are a catalyst for change or “constructive disturbances”.
This approach fascinates me, as it gives the talk of a “digital ecosystem” a whole new meaning. Banks were part of a broader system even before digitisation. They changed it constantly, and it influenced them too. However, from a technological perspective, it was much more difficult in the past to put this connectivity into practice. Today we are seeing a strong drive towards change and have the tools at our disposal to make it a reality as part of a digital ecosystem. Our Digital Banking Hub allows banks to integrate third-party providers into their systems and offer their own services through external systems. An API-based architecture is used to create an open system that reflects the sustainability that robust companies have in their very DNA and gives financial institutions the opportunity to develop their potential for evolution.
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