Key observations
Creating value for customers
Successful digital banks are able to identify a gap in the crowded banking space beyond the deposits/payments space. This gap needs to be of sufficient size and growth potential to build a business model that addresses customers’ needs or pain points.
Building your organisational DNA
Digital banking goes beyond digitising legacy banking approaches. Successful digital banks share a common organisational DNA that lets them achieve their winning proposition.
They are able to leverage technology to innovate and build fundamentally different approaches in delivering their services. They also do this with agility to remain ahead of their competitors, while keeping operations costs lean in acquiring and servicing customers.
Acquiring the right capabilities to differentiate your offerings
Digital banks have shown that they are able to differentiate their approach to banking and deliver services that are targeted, personalised and unique.
These differentiators include focused features for each customer, propositions that integrate with how customers live, partnerships that allow access to a wider range of products and offerings, and technology that enhances the banking experience.
Reinventing the ‘box’
Legacy issues mean that incumbents experience more challenges than opportunities in virtual banking, including slow governance, concerns around cannibalisation, and margin compression. However, this is an opportunity to develop business models that work around these issues. Driving digital transformation, creating a sandbox for new products and operating on a standalone basis are among the ways to gain a foothold in the market.
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