Today, banks have an unprecedented opportunity to turn digital disruption into digital differentiation. However, unlike other opportunities, this one is not optional. Incumbent banks are already at a disadvantage compared with digital innovators like Google, Amazon, Facebook or Amazon (GAFA) or Fintech companies.

Banking future growth value analysis (as percent of enterprise value).

Four models for the future of banking

To win in the digital economy, banks must engage with customers in different ways and engage with ecosystems outside the traditional boundaries of banking. On the Accenture Banking Blog, my colleague Alan McIntyre outlines four business models that can help banks adapt to the digital economy.

Three steps to ease the transition to a new business model

Once banks have determined the business model—or models—that will equip them to compete in the digital economy, they can take three steps to prepare for the multi-year transition.

  • Be brilliant. Industry analysts estimate that banks’ cost-to-income ratio typically exceeds 60 percent. The path forward must see that drop to 40 percent or less. Key enablers are to personalize the customer experience across multiple channels, and to establish new metrics that align with success in the digital age.
  • Be realistic. Of the four business models that Accenture has identified, the Digital Relationship Manager is most similar to the traditional banking business model. However, the reality is that few banks will thrive under this model. Banks should keep an open mind about whether a narrower, more focused model might better serve their needs, as well as those of customers and shareholders.
  • Be bold. Once banks have decided on their business model, they must be ruthless in shedding the parts of the business that no longer fit. This may include entire lines of business or customer segments—but rather than see it as a loss, banks should focus on their enhanced ability to serve the elements of the business they retain.

Today’s banks face unprecedented pressures from customer expectations, digital disruption, and regulatory and other market forces. In this new environment, it isn’t enough for banks to be better at what they already do; it’s imperative for them to adapt their business models for a digital marketplace.

I invite you to learn more about Accenture research on implications of the digital economy on traditional banks. For more details on how Accenture can help you pivot to a new business model, email me.