Deconstructing banking complexity through a ‘greenfield on top’ approach

Spencer Izard, Research Director from Analyst Research firm, PAC, writes in their recent report, ‘Deconstructing banking complexity through a ‘greenfield on top’ approach’ about how banks can evolve past the limits of their legacy banking systems to transform into an evergreen digital bank. 

The report states that, ‘Over the past decade, the financial services industry has experienced significant digital disruption led by changing customer behaviour, regulatory change, and the rise of Fintech companies. These factors created the perfect environment for the rise of neo-banks that operate more like tech start-ups than traditional banks and offer online-only digital banking capabilities at a pace and sophistication that incumbent banks could not initially compete with. The typical start-up pattern for Fintech-based neo-banks has been to collaborate with a licensed bank to meet regulatory demands before a neo-bank acquires its banking license.’

It goes on to say, ‘The financial services industry had for decades been very conservative in nature with its operating model remaining relatively the same. The combined disruption of Fintech companies and neo-banks though showed incumbent banks that customer attitudes were not only changing but doing so rapidly. Exposing incumbent banks to erosion in their customer base if not addressed. The challenges of operating model rigidity and legacy banking systems have impeded the ability of incumbent banks to deliver services in the same manner as neo-banks. From conversations PAC has had with banks it is often raised that being popular with customers does not always equate to sustained profitability. However, the shift in customer expectation has led to incumbent banks realising that the banking world has changed, and they must evolve to meet demand.’

Commenting on PwC, ‘PAC considers PwC a proven partner in the financial services sector that combines a depth and breadth of accelerator and eco-system capabilities delivered through its Infinite Financial Solutions (IFS) offering. Identifying the right transformation partner is essential to accelerate the transition at pace and scale. Each month PAC speaks with people in the banking industry who express challenges in finding the right talent to aid in their transformation. PAC strongly recommends that banks consider a co-creation relationship with PwC to reduce their transformation window, drive innovation, and reduce costs.’

Akhilesh Khera, Partner, Financial Services, Digital Transformation, PwC UK, says, ‘Our digital banking proposition, innovating on financial services cloud by Microsoft, helps clients accelerate transformation and raise the customer experience bar with responsive, personal and connected products for everyday money management, insightful saving goals and hassle-free borrowing. This proposition drives a massive improvement in time-to-value, and the extensibility of digital banking growth and expansion.’

John Lyons, Partner, EMEA Technology Leader, PwC UK, said, ‘By leveraging the huge investments in Industry Cloud technology by the likes of Microsoft and their fintech ISVs, we can quickly develop innovative digital platforms for our Financial Services clients. We use our global network of Member Firms, technology Alliance partners, and other relationships within our ecosystem to bring together these leading technologies coupled with our industry experience in areas such as customer, risk, cyber, regulation, culture and beyond, to deliver real results.’ 

Click here to read the report 

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