Traditional banks are bound to adapt or disappear.

Traditional banks are bound to adapt… or disappear

by Jorge Gomez (Mind the Bridge Foundation)


The retail-banking industry is ready not just for disruption, but for displacement of traditional entities. As a result of the transformation this ultra-competitive space is going through, “the banking system will remain relevant… but banks may not”, to quote Samir Rath.

Banking is evolving to faster, more integrated and better connected distribution channels (the so-called omnichannel imperative) that optimizes efficiency, reduces costs and engages both current customers and prospect in a consistent, more approachable way. The overall customer life cycle plays a crucial role when it comes to improving customer retention and experience and therefore enables better service and more profitable outcomes on both sides.

Against this background, banks need to embrace the digital transformation and embed it internally through their whole value chain: from back end processes to customer touch points, traditional banks need to fully deliver and provide new ways to collaborate and create value, generate highly personalized customer experiences, build cost effective operations and lean interactions, reduce churn, increase loyalty, boost the level of trust (highly damaged after the financial crisis of 2008) and transform their massive – and somewhat reluctant to change – workforce.

As a result of the major forces (cost advantage, convenience, new sources of capital, risk management and regulation) driving this dramatic change, the competitive banking landscape is changing rapidly as the digital consumers are being served by disruptive models that best adapt to their needs. The good news is that there is plenty of rewards for those banks willing to introduce the much needed adjustments; the bad news is that the change is upon us, whether banks are ready or not!
Implementation of the modifications that these strategic and digital innovations bring – provided not only internally, but mainly by fast growing startups and later stage scaleups – will distinctly separate those who will evolve and succeed and those who will be put aside and written off, changing forever the traditional retail-banking business model.

Banks have to embrace disruption and innovation that is happening in the market” says  Teppo Paavola, Senior EVP, General Manager of New Digital Businesses and recently appointed Member of Exec Leadership Team at BBVA, one of the SEP Corporate Members. “Change is happening anyway, and it is our interest to be part of it”.