Banking redefined

Disruption, transformation and the next-generation bank

For generations, banking was nearly impenetrable to outside agencies. Value was generated by providing customers with core banking services. As critical intermediaries, bankers were able to sustain healthy margins.

But a triple set of challenges have emerged, requiring bankers to rethink how they do business: declining revenues combine with difficulties making additional cost reductions; new classes of customer are easily dissatisfied and disillusioned, possessing ever-growing expectations of engagement and experience; and a new breed of competitor is emerging for banking customers.

Traditional banking functions are being contested and are becoming commoditized. As a consequence, value is shifting from functional capabilities to relationships. While emerging competitors may be able to replicate banking functions better and at lower cost, they will find it much more difficult to build and manage the breadth and depth of customer relationships traditional banks have carefully built over decades.

Because of these relationships, traditional bankers far from being disintermediated, have the ability to shift their focus from service fulfillment to service-facilitation and orchestration. Banks can position themselves as the principal gatekeeper to their customers, facilitating an ever-evolving ecosystem of services and experiences.

To achieve this, traditional banks will need to rapidly transform. They will need to connect with an ever-expanding portfolio of business partners. And they will need to engage customers in new, powerful and sustainable ways. The rewards will be significant for those banks that can rise to these new challenges. For those that fail to do so, the future may be less bright.

Download the IBM Institute for Business Value Executive Report

About the authors

  • Nicholas Drury

    Nicholas Drury

    Global Banking & Financial Markets Leader for the IBM Institute for Business Value

  • Likhit Wagle

    Likhit Wagle

    Partner and Global Industry Leader for Banking and Financial Markets, IBM’s Global Business Services
    Connect with Likhit Wagle

Related IBM publications

  • IBM

    Download the IBV App

    Access our latest thought leadership, including C-suite studies and industry insights. Maintain a library, receive regular updates. Explore enhanced content.

  • IdeaWatch Newsletter

    IdeaWatch Newsletter

    Sign up to receive monthly e-mail updates on recent papers from the IBM Institute for Business Value.

  • Banking consulting

    Banking consulting

    Our banking solutions, technology and consulting can help you use this insight to attract and retain customers, develop new sources of revenue, streamline operations and address risk and regulatory requirements.