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A great wave of change has been breaking over the financial services industry for some time now. When it finally recedes, we can expect a fundamentally transformed market infrastructure to be left behind in its wake.
Driven by unprecedented speed and adoption of new technologies and business models, and accelerated by game-changing regulatory directives like PSD2 and GDPR, this new world of banking will be one of open architectures and broad, integrated ecosystems.
Banks need to act now to be ready for these changes, or risk being caught in the swell. Unfortunately, while some areas of banking are adjusting, others have not been keeping pace with the new currents of digital transformation.
This is certainly the case with corporate banking.
Many corporate banks are saddled with outdated legacy technology that is expensive to maintain, limiting what they can offer. Services tend to be splintered across multiple channels, making for a disjointed customer experience. Wildly different technologies and formats stand in the way of convenience and interoperability.
Under these conditions, it is understandable if corporate banking clients feel underserved, especially compared with what is available in other industries – or even in retail banking.
This is bad for the clients. It is also dangerous for the banks.
Out in the cold
We see two main areas of concern.
Among other things, we believe they should:
Riding the wave
This brave new world will open any number of possibilities for those banks that can adapt.
In a world of trillions of nanosecond micropayments and smart contracts, we think banks will increasingly be seen as trusted providers and fraud risk managers, for instance. This could generate new service opportunities and revenue streams, particularly for banks that have developed industry-specific capabilities.
We think digitalization will also allow banks to move from a one-to-one model based on traditional products to a one-to-many approach featuring new digital products and services. That’s good for clients but also banks – as many of these new digital services can be offered at scale while still being easily customized.
There are a host of other possibilities we might name.
While corporate banks may have been hiding their heads in the sand up to now, we think they can no longer avoid the wave of digital disruption.
Those that dive into the water now should be able to ride this wave to new heights. Those that don’t may very well sink.
This article originally appeared at: LinkedIn