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Evolution of banking from now and on

The pandemic caused a period of unprecedented turmoil and opportunity in the world around us. Markets including banking are changing faster in the past year than at any time before. Now, traditional and alternative financial institutions have to align products and services they offer with their customers' needs and expectations. The ultimate target is embedding banking in a consumer's daily life while being invisible, but vital.

Financial institutions have to prioritize short-term and long-term business goals to face economic uncertainty, increased competition, new technological advances, and changing consumer expectations. But the question is if organizations leverage the benefits they have to make a powerful evolution thrust by using new technologies in 2021 and beyond?

Cost reduction is a short-term cure

These days, a lot of financial institutions have focused on traditional short-term strategies like cutting costs across the entire organization as a response to the period of low interest rates, slim margins, and diminished demand for credit. And many scaled back workforces, eliminated product lines, stopped serving certain segments and geographies, closed branches, and reduced investment in new technology and innovation.

One of the negative impacts of cutting costs has been the shift away from less profitable businesses and populations, including less wealthy segments and geographies. But the idea is that it's impossible to make way to prosperity through cost-cutting. The investment must be made to meet consumer expectations for enhanced digital experiences and employee expectations to become digitally ready for the future.

Consumer expectations and banking priorities: bridging the gap

With the outbreak of the pandemic, financial institutions needed to provide online access to all financial services via digital channels because of the restrictions on in-person branches. But according to the World Retail Banking Report 2021, from 40% to 50% of bank executives admitted that they don't know how to streamline and integrate mid-, back- and front-office functions effectively, and how to embrace open banking, orchestrate the ecosystem or become a truly data-driven organization. At the same time, consumers embraced digital experiences rapidly to save themselves time and money.

Legacy financial institutions have to increase investment in areas that the consumers value the most to remain competitive. It includes improvement of digital engagement speed and simplicity, usage of data and analytics for proactive real-time recommendations, creation of new ways to engage and care for customers, and exploration of value-added ways to make a consumer’s life easier.

Drive Post-pandemic evolution: driven by customers

Most traditional financial institutions are not structured to correspond to a new digital paradigm shift. Consumers' expectations are rising because of their awareness of the capabilities created by data, advanced analytics, new technology, and digital communication. Siloed organizational structures and outdated analysis tools can't longer process data fast enough. Legacy product alignment, repositioning the offering of services, and the commitment of resources around the customer need rethinking.

Traditional banking is to evolve into a digital-first, seamlessly integrated banking experience via a combination of digital channels and modernized branches. A focus should shift from product-centric innovation to customer-centric intelligent transformation.

Banking-as-a-Service (BaaS): platform approach

Banking-as-a-Service model centers both on facilitating value creation and value exchange between both financial and non-financial institutions making the consumer a primary beneficiary. BaaS platforms accelerate the innovation process, simplify the offering and delivery of products and services, allow for faster iterations as consumer behavior changes.

The ultimate goal of a BaaS approach is to increase customer engagement, enhance loyalty and overall customer value by moving financial institutions towards “embedded finance” as a part of consumer’s everyday life. The combination of financial services with social media, retail, transportation, hospitality, investment, and advisory services enables the increase of the potential to provide value to retail consumer segments or even on an individualized basis.

Super applications emerging: super combo in action

From giants like Apple, Google, PayPal, and Amazon to FinTech firms, retailers, telecom companies, and old school providers like Goldman Sachs, the number of organizations stirring their fingers in the banking ecosystem continues to expand. When consumers were asked what banking services they would use from non-traditional providers, the array of responses were far broader than just basic banking operations. This shows that consumer interest expands far beyond their financial relationships with the traditional banking system.

This means that even the definition of “primary financial institution” (PFI) should be rethought because many Millennials would not consider their PFI to be used for only checking their bank account, but for a wider variety of other options.

Cloud computing: customer experience enhancement

There were years of hesitation around the adoption of cloud computing for the reasons of security, costs, implementation timelines, and ROI rationale. And for the majority of organizations, the move to cloud computing is only the initial step towards complete cloud transformation. But moving data processing to the cloud embraces way more benefits to ignore: reduced costs, scalability, and flexibility improved productivity, faster innovation to name a few.

At times when the personalization of the customer experience is becoming a business requirement, the capability to process data and create insights in real-time requires a strong cloud architecture. The capability to collect, process, and use data insights for the consumer’s benefit turns imperative. The simple truth is if consumers get value from using their private information, they will share more in the future, making relationships stronger.


Due to becoming more ubiquitous and embedded in customers’ everyday lives, legacy financial institutions will be forced to be at the center of that ecosystem. More organizations will appear to occupy that position not even being traditional financial organizations. The key principle will become to use data and insights to provide value for winning trust and loyalty in return. To succeed in this concept the collaboration with players outside of traditional banking is needed to make consumers even more engaged with their “banking” app than they are today.


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Sergei Artimenia

Sergei Artimenia

Managing Director

Member since

16 Aug 2021



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