Progressive core banking transformation enabled by shift to platform-based models can help banks take swift action to improve innovation, growth, profits and operational efficiency
Retail banks are facing pressure to transform as new entrants focused on customer experience gain significant market traction, according to the World Retail Banking Report 2020 (WRBR) published by Capgemini and Efma. As the pandemic environment is moving consumers to interact more digitally with their banks, platform models offer agility and scalability during uncertain times. The report found that platform-based banks find it up to two-times easier to increase operating profits, unlock new sources of value, and improve operational efficiencies.
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“COVID-19 has put a spotlight on the digital banking experience”
The report reveals that the global financial sector is in the midst of an historic transformation as nimble, digitally native non-traditional players continue to champion customer experience and redefine long-held principles to gain significant market traction. With over half (57%) of consumers now preferring internet banking, up from 49% pre-COVID-19, and 55% preferring banking mobile apps, compared with 47% previously, the stakes have risen further as the COVID-19 context continues to move consumers towards digital banking.
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The report suggests that banks need to evolve into platform-based models to fuel the growth and innovation needed to stay competitive and that embracing Open X1 will be critical to long-term success. While COVID-19 has accelerated the urgency for digital transformation, banks may need to take a more pragmatic approach to transformation to pursue their journey towards Open X given these uncertain times.
“Consumers expect a seamless digital experience from their financial providers, as they’ve grown accustomed to BigTechs in other parts of their lives. Traditional banks are being challenged to meet these expectations given that digitally native new entrants focus on customer experience from day one,” says Anirban Bose, CEO of Capgemini’s Financial Services and Group Executive Board Member. “Banks that invest now in modernizing their core technology and evolve it to a platform-based experience will simultaneously delight customers and grow profitably.”
